ARTICLE
6 January 2016

SEC Releases Staff Report On Accredited Investor Definition

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Kramer Levin Naftalis & Frankel LLP

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The SEC issued a staff report on the accredited investor definition, as required by Dodd-Frank every four years, to determine whether the definition should be modified or adjusted.
United States Corporate/Commercial Law

The SEC issued a staff report on the accredited investor definition, as required by Dodd-Frank every four years, to determine whether the definition should be modified or adjusted. Among other possibilities, the report recommends that the definition be revised "to allow individuals to qualify as accredited investors based on other measures of sophistication" than the current measures of income and net worth. It suggests that people with a threshold level of investments or a professional certification could become eligible, as well as those experienced investing in exempt offerings, "knowledgeable employees of private funds" or anyone who passes a test. The report analyzes various approaches for modifying the definition and considers comments on the definition received from a variety of sources, including members of the public, the Investor Advisory Committee and the Advisory Committee on Small and Emerging Companies. It considers alternative approaches to defining accredited investor, provides staff recommendations for potential updates and modifications to the existing definition and analyzes the impact potential approaches may have on the pool of accredited investors.

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