Do you think the definition of “accredited investor” is flawed? Do you fail to see how net worth and yearly salary has a direct tie to the sophistication of an investor? Are you of the opinion that too few (or too many) of your fellow citizens are allowed access to the private marketplace?
If so, now’s your chance.
In a recent release, the SEC asks for public comment on “a number of proposed amendments to Regulation D, Form D and Rule 156 under the Securities Act.” The questions they’re asking the public to provide input on are as follows…
- Are the net worth test and the income test currently provided in Rule 501(a)(5) and Rule 501(a)(6), respectively, the appropriate tests for determining whether a natural person is an accredited investor? Do such tests indicate whether an investor has such knowledge and experience in financial and business matters that he or she is capable of evaluating the merits and risks of a prospective investment? If not, what other criteria should be considered as an appropriate test for investment sophistication?
- Are the current financial thresholds in the net worth test and the income test still the appropriate thresholds for determining whether a natural person is an accredited investor? Should any revised thresholds be indexed for inflation?
- Currently, the financial thresholds in the income test and net worth test are based on fixed dollar amounts (such as having an individual income in excess of $200,000 for a natural person to qualify as an accredited investor). Should the net worth test and the income test be changed to use thresholds that are not tied to fixed dollar amounts (for example, thresholds based on a certain formula or percentage)?
Comments can be submitted through the SEC’s web site either directly through the provided form or as an attachment.
[h/t Startup Law Blog]