SEC Advisory Committee Recommends Expanding Accredited Investor Status
Recently, the SEC’s Advisory Committee on Small and Emerging Companies recommended that the “accredited investor” definition in Regulation D be expanded to include individuals who meet a “sophistication test, regardless of income or net worth.” Rather than attempting to protect investors by raising net worth and income thresholds in the definition, the committee recommended that the SEC focus on enhanced enforcement efforts and increased investor education. Under the Dodd-Frank Act, the SEC is required to evaluate the definition of accredited investor every four years. Commissioner Gallagher previously noted that he was “extraordinarily skeptical” about such a new sophistication test. However, Commissioner Aguilar has indicated that he favors the change. Read the committee’s recommendations and the remarks of Commissioner Gallagher andCommissioner Aguilar.