On August 26, 2020, the Securities and Exchange Commission (SEC) adopted new final rules intended to modernize the existing rules, and provide additional flexibility for certain entities and individuals the SEC deems financially sophisticated enough to understand the risks of participating in private offerings.
These additions to the definition of accredited investor, particularly those changes regarding professional certifications, designations, or credentials and to qualifying family offices, are positive changes that will expand investment opportunities for certain entities and sophisticated individuals who previously did not qualify as accredited investors, and increase the private fundraising capabilities of corporations.
The accredited investor definition in Rule 215 and Rule 501(a) of Regulation D promulgated under the Securities Act of 1933, as amended, has been amended to make the following additions:
Notably, the SEC did not revisit the accredited investor financial criteria for natural persons, which remain largely unchanged since 1982 despite not having been indexed for inflation.
These amendments were announced on August 26, 2020, and will become effective 60 days after publication in the Federal Register.
For more information or to discuss how this may impact the structure of your future investments, please contact Coblentz’s Corporate attorneys Sara Finigan at firstname.lastname@example.org or Christopher Westman at email@example.com.