Barbara Roper, director of investor protection for the Consumer Federation of America, stated on Twitter that the SEC argued that an investment test "is a better measure of sophistication than an asset test" for those qualifying to be an accredited investor.
"So why didn't they [the SEC] consider changing the net worth requirement for individual investors to an investment test?" Roper queried.
As the agency explained, the proposed amendments — which will be out for a 60-day comment period — would add new categories of natural persons based on professional knowledge, experience or certifications.
The changes would also add new categories of entities, including a "catch-all" category for any entity owning more than $5 million in investments.
In particular, the amendments would add:
- new categories to the definition that would permit natural persons to qualify as accredited investors based on certain professional certifications and designations, such as a Series 7, 65 or 82 license, or other credentials issued by an accredited educational institution;
- with respect to investments in a private fund, add a new category based on the person's status as a "knowledgeable employee" of the fund;
- limited liability companies that meet certain conditions, registered investment advisers and rural business investment companies (RBICs) to the current list of entities that may qualify as accredited investors;
- a new category for any entity, including Indian tribes, owning "investments," as defined in Rule 2a51-1(b) under the Investment Company Act, in excess of $5 million and that was not formed for the specific purpose of investing in the securities offered;
- "family offices" with at least $5 million in assets under management and their "family clients," as each term is defined under the Investment Advisers Act; and
- the term "spousal equivalent" to the accredited investor definition, so that spousal equivalents may pool their finances for the purpose of qualifying as accredited investors.
SEC headquarters in Washington. (Photo: AP) 
