Emerging Markets Law

SEC Amends Definition of Accredited Investor

Posted In SEC

The SEC announced yesterday that it is adopting changes to the definition of “accredited investor” that will change the way start-ups and growing businesses can recruit investors for exempt transactions under Regulation D and Regulation A.

The final rule adopted by the SEC changes the definition so that it includes individuals who hold “professional certifications” that the SEC determines are sufficient so that the individual can “reasonably be expected to have sufficient knowledge and experience in financial and business matters to evaluate the merits and risks of a prospective investment.”

The SEC announced that it would have an initial list of those certifications on its website and that other approved certifications would be added later through a separate rule-making.  The amended definition will take place 60 days after it is published in the Federal Register, which could lead to an effective date around November 1, 2020.

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