And so it begins.  There have been two recent speeches from Commissioners touching on the private markets; Commissioner Lee's was the most recent and most specific.  The Commissioner suggests that the Securities and Exchange Commission consider modernizing the accredited investor wealth thresholds.  She points out that the income and net worth thresholds have not been updated since they were put in place four decades ago and states that they no longer function as intended.  In addition, the Commissioner suggests that the thresholds be indexed to inflation.  This, of course, was the subject of many comment letters and commenters, including practitioners noted that inflationary indexing would be impractical.

The Commissioner addressed the perceived issues with lack of transparency in the private markets.  She pointed to the proposed amendments to Regulation D from 2013, which were not adopted or advanced after having elicited almost uniformly negative comments.  The Commissioner has suggested revisiting the Regulation D amendments and including, among other amendments, the following:

  • Consideration to condition the availability of the Rule 506(c) exemption on the filing of Form D;
  • Consideration to require the filing of Form D in advance of a Rule 506(c) offering and require a closing amendment for Rule 506(b) and (c) offerings;
  • Consideration to require additional information to be collected on Form D; and
  • Consideration to require the use of legends on Rule 506(c) written general solicitation materials and the filing of such materials with the Commission.

See the full text of the speech here.

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