In a modest shift in the way it has traditionally viewed natural person investors in private offerings, the US Securities and Exchange Commission (the “SEC
”) has adopted amendments
that will expand the definition of “accredited investor” under Regulation D to include additional means of measuring a natural’s person financial sophistication, rather than focusing only on the person’s income or net worth. The final amendments also add new categories of entities to the definitions of both “accredited investor” under Regulation D and “qualified institutional buyer” (“QIB
”) under Rule 144A.
At the same time, the SEC opted not to revise the financial thresholds for natural person accredited investor status, which have not been adjusted for inflation since their establishment in 1982. An inflation adjustment would have significantly decreased the number of natural persons qualifying as accredited investors.
The amendments will become effective 60 days after they are published in the Federal Register.
Read our full analysis document here.