Thursday, August 27, 2020

Proposed Change to Accredited Investor Definition

The definition of an accredited investor has always been based on income and net worth. Over the decades that definition has become outdated and excludes individual who have the financial ability and acumen to make informed investment decisions.

All of that is about to change. On August 26 the SEC adopted amendments to the “accredited investor” definition allowing investors to qualify as accredited investors based on defined measures of professional knowledge, experience or certifications in addition to the existing tests for income or net worth. The amendments also expand the list of entities that may qualify as accredited investors, including by allowing any entity that meets an investments test to qualify.

The Final Rule Changing the Accredited Investor Definition is online. The changes go into effect 60 days after publication in the Federal Register.

The SEC's Accredited Investor Fact Sheet explains the changes.