Today, the Securities and Exchange Commission adopted long-awaited changes to the definition of “accredited investor,” as well as some conforming changes to the definition of “qualified institutional buyer.” The SEC Fact Sheet released today highlights a number of the most significant changes, which, among others, include expanding the accredited investor definition to include natural persons, without regard to the net worth and net income test, that have certain licenses (Series 7, 65 and 82), knowledgeable employees of a fund with respect to investments in that fund, LLCs with $5 million in assets, SEC and state registered investment advisers, and certain governmental entities that own investments in excess of $5 million. In addition, the definition will include family offices and their family clients. The amendments clarify that, for purposes of meeting the natural persons test, spousal equivalents may pool their resources to qualify.
The amendments become effective within 60 days of the Federal Register publication. A Legal Update will follow.