The Investor Advisory Committee (IAC) of the SEC met last week to tackle several pressing issues that are on the agenda at the Commission today. One of the items on the agenda was the definition of an “accredited investor”. For most people this is an arcane issue that merits little attention, but once you dig a bit you realize this definition holds profound impact for the economy and for investor rights.
First of all “accredited investors” represent a group of people, such as angel investors, who support startups and small businesses. These are the companies that create jobs and fuel economic growth. Some members of the committee want to increase requirements to be accepted as an “accredited investor” – something that will most certainly be detrimental to our national economy.
Secondly the current definition is deeply flawed at best. Presently an individual is considered to be “accredited” due to the individuals net worth or income. As most level minded folks understand, a hefty bank balance does not equal intellect. The definition, on the books since 1982, excludes millions of people who otherwise are deemed capable of making very important decisions on a daily basis. Think – Doctors, Lawyers, Congressmen, Professors. Should I continue? The IAC is preparing to make a recommendation to the SEC on the definition now.
Crowdfund Insider covered the event but if you want to watch it for yourself the video is available below in all its glory.