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SEC Proposed Changes May Increase Accredited Investors

Specialists at SEC are proposing to amend the concept of “accredited investor” to expand access to the market. 

Currently, an accredited investor is considered an individual with a net worth of more than $ 1 million, or earning more than $ 200 thousand per year. The concept also extends to some organizations whose total assets exceed $ 5 million.

The status of an accredited investor gives legal entities and individuals access to more private investments. This includes more risky investments and works with hedge funds. The latest changes to the definition were made on December 17, according to the SEC website.

What Does SEC Want To Change?

The SEC proposal wants to expand the list of categories of citizens and organizations that can get the accredited investor status. In particular, they plan to add representatives of foundations, some organizations and family enterprises that meet the requirements to the list. At the same time, legal entities must own assets for a minimum amount of $ 5 million.

According to SEC Chairman Jay Clayton, at the moment the definition of status provides only a “binary approach” to who has or is not entitled to work in the status of an accredited investor. The specialist believes that changes are necessary.

Morgan Creek Digital co-founder Anthony Pompliano, in turn, noted that innovations will help eliminate investor discrimination.

Another proposal, including the possibility of expanding access to the market, was the assignment of the status of an accredited investor by passing a special test by a person.

Following the publication of the proposed changes, the SEC team allotted 60 days to comment and discuss the initiative.