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Securities law Section
Chairs:EricFeld-WiandGuerraKingP.A.&JosefRosen-GrayRobinson,PA
With fewer and fewer
companies going
public and the
companies that do
go public waiting longer and longer
before doing so, it has long been
a complaint that non-accredited
investors are unable to participate in
attractive investment opportunities
available to “accredited investors,”
such as investments in private
companies and offerings by certain
hedge funds, private equity funds,
and venture capital funds. The
SEC has proposed rule changes
which aim to increase access to
these opportunities by: (1) expanding
the definition
of “accredited
investor,” and
(2) decreasing
an issuer’s
financial disclosure
requirements
when accepting
non-accredited
investors.
Amendments
to the definition
of Accredited
investor
Many consider
the current
definition of
“accredited
investor” in
Regulation D to be
overly restrictive
and overly focused on income and
net worth. Currently, the most
common way a natural person
qualifies as an “accredited investor”
is by having a net worth over
$1,000,000 (excluding the value of
Manyconsiderthe
currentdefinitionof
“accreditedinvestor”
inregulationdto
beoverlyrestrictive
andoverlyfocusedon
incomeandnetworth.
a person’s
primary home)
or having
earned income
that exceeded
$200,000
(or $300,000
together with a
spouse) in each
of the past two
years with the
reasonable
expectation to
earn over this
threshold in the
coming year.
In response,
the SEC has
proposed
revising the
“accredited
investor”
definition with regard to natural
persons in order to permit
qualification as an accredited
investor if such investor (1) has
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