In The News: The SEC Updates the Definition of “Accredited Investor”



The final rule is effective December 8, 2020. Click here to learn more.


On August 26, 2020, the Securities and Exchange Commission (SEC) adopted amendments to the “accredited investor” definition, which is one of the principal tests for determining who is eligible to participate in private capital markets.  Historically, individual investors who do not meet specific income or net worth tests, regardless of their financial sophistication, have been denied the opportunity to invest in our multifaceted and vast private markets.  The amendments update and improve the definition to more effectively identify institutional and individual investors that have the knowledge and expertise to participate in those markets.

More information on this topic is coming soon. Be sure to check back for updates.

A summary is below. Click here for the full SEC Press Release.

We are adopting amendments to the definition of “accredited investor” in
our rules to add new categories of qualifying natural persons and entities and to make
certain other modifications to the existing definition. The amendments are intended to
update and improve the definition to identify more effectively investors that have
sufficient knowledge and expertise to participate in investment opportunities that do not
have the rigorous disclosure and procedural requirements, and related investor
protections, provided by registration under the Securities Act of 1933. Specifically, the
amendments add new categories of natural persons that may qualify as accredited
investors based on certain professional certifications or designations or other credentials
or their status as a private fund’s “knowledgeable employee,” expand the list of entities
that may qualify as accredited investors, add entities owning $5 million in investments,
add family offices with at least $5 million in assets under management and their family
clients, and add the term “spousal equivalent” to the definition. We are also adopting
amendments to the “qualified institutional buyer” definition in Rule 144A under the
Securities Act to expand the list of entities that are eligible to qualify as qualified
institutional buyers.


For more information on this or anything else, please get in touch with us at or call 720-306-1001.


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