Hester Peirce, commissioner at the Securities and Exchange Commission, said Tuesday that she'd like to see the accredited investor standard eliminated.
Peirce made her comments during a fireside chat at the Financial Services Institute's Forum & Capitol Hill Day in Washington.
Dale Brown, FSI's president and CEO, reiterated Peirce's comment that she'd like to see more Americans have access to wealth-creation opportunities in the private markets. FSI has been "passionate about the role of access to professional advice" to help Americans take advantage of such opportunities, Brown said, asking Peirce to weigh in on the role of the accredited investor definition in this wealth creation area.
"I would like to see elimination of the accredited investor standard," Peirce responded. "...It's something that I hear a lot about from investors, they're very offended that the fact that they don't have a lot of money means that they're shut out from a huge part of the market."
Ending the limits won't send "everyone" into the private markets, Peirce said, but for "people who wanted to do the work and understand private investments, giving them access would be a better approach."
What's more likely to happen, Peirce continued, "is we'll make it easier for retail investors to access the private markets through diversified funds with professional managers."
Certain investments — like private placements, private equity and debt, and some interval funds and cryptocurrency vehicles — are available only to investors who meet certain income, wealth or financial sophistication criteria. Supporters of the accredited investor limit limit say it helps protect unsophisticated investors from losing money in vehicles that are illiquid, complex or lightly regulated.
SEC Marketing Rule
Peirce told attendees that she's also open to hearing more feedback on ways the SEC can improve the marketing rule.
"It was a big rule and I think some of the early frustration was the marketing rule is actually preventing us from giving to investors information that they would like to have in order to assess the work that we're doing," Peirce said. "That isn't where we wanted to be with the marketing rule."
The updated FAQ guidance the SEC released in March makes "a little bit of progress," she noted.
The updated guidance answered questions on the net performance requirement as it relates to abstracted performance as well as determining whether certain portfolio or investment characteristics are performance.
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