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SEC Wants to Expand “Accredited Investors”

By Stephen Barlas
March 1, 2020
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The U.S. Securities & Exchange Commission (SEC) wants to expand the number of investors who can invest in initial public offerings.

 

Currently, only “accredited investors” having in excess of $1 million of assets or an annual income of more than $200,000 can invest in nonpublic, i.e., private, companies. Private market companies don’t have to submit publicly available financial reports, so there is more risk in investing in those companies.

 

The SEC would add a number of new categories to the definition of “accredited investor,” including investors based on certain professional certifications and designations and a person’s status as a “knowledgeable employee” of a private fund. Douglas Ellenoff, counsel to the Association of Online Investment Platforms, said, “Expanding the definition to include more Americans to be able to invest as they see fit makes sense to me.”

 

Stephen Barlas has covered Washington, D.C., for trade and professional magazines since 1981 and since 1984 for Strategic Finance and its predecessor Management Accounting. You can reach him at sbarlas@verizon.net.
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