The Securities and Exchange Commission (the “SEC”) today expanded the definition of an “accredited investor” to include persons who have demonstrated certain levels of financial sophistication.
Previously, only persons with at least $1 million in assets not including their home, or $200,000 in annual income, could participate in private investment opportunities, such as private equity, hedge funds, venture funds, start-ups and commercial real estate.
The final rule also clarifies that certain entity types with sufficient assets, including family offices, Indian tribes, governmental bodies, and limited liability companies, are also accredited investors.
In 2019, public registered offerings accounted for $1.2 trillion (30.8%) of new capital, compared to approximately $2.7 trillion (69.2%) that the SEC estimates was raised through exempt offerings.