SEC Seeking Private Investor Standard Updates

The Securities & Exchange Commission (SEC) has released a staff report outlining potential changes to the criteria used to determine who can participate in private securities transactions as an “accredited investor,” including a potential increase in the income and net worth levels necessary to qualify as an accredited investor.

The current standards have not been modified since 1982, although some changes were made in 1988. Under current rules, an investor must have either (a) an annual income of more than $200,000 (or $300,000 together with a spouse) in each of the prior two years and reasonably expect the same for the current year or (b) a net worth over $1 million (excluding the value of the investor’s residence). These thresholds must be met for an investor to qualify to invest in securities offerings that are exempt from registration requirements under Regulation D.

The current income and net worth levels do not account for inflation over the past few decades. The SEC staff report suggests new thresholds of $500,000 annual income or $2.5 million net worth, along with certain alternative proposals.

Alternatively, the SEC staff proposed keeping current income levels, but reducing the amount that an investor could invest in private offerings. The proposal also suggests creating new ways for investors to demonstrate that they are qualified enough to invest in unregistered securities, including possible portfolio analysis, ability to absorb losses, professional credentials, and even an accreditation examination.

The SEC is currently seeking public comments on the proposals.

Contact Us Today

The attorneys at Dimond Kaplan & Rothstein, P.A. have represented hundreds of investors who have lost money in unregistered securities. Including those who did not qualify as accredited investors, but brokers still recommended and sold the securities to the investors. If you have questions about investing in securities under Regulation D, contact us to schedule an appointment or consultation today.

EN   ES   PT     

Miami Office
Grand Bay Plaza
2665 S. Bayshore Drive
Penthouse 2B
Miami, FL 33133
Telephone: 786.628.8236

Los Angeles Office
Available by Appointment
2029 Century Park East
Century Plaza Tower
Suite 400N
Los Angeles, CA 90067
Telephone: 424.544.7930

New York City Office
Available by Appointment
14 Wall St, 20th Floor
New York, NY 10005
Telephone: 917.382.5217

West Palm Beach Office
Northbridge Centre
515 N. Flagler Drive, Suite P-300
West Palm Beach, FL 33401
Telephone: 561.475.2887

Detroit Office
41000 Woodward Avenue,
Suite 350 East
Bloomfield Hills, Mi 48304
Telephone: 248.368.0182