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August 30, 2020 | Tom Ballard

SEC expands definition of an accredited investor

Crunchbase Daily reports that the U.S. Securities and Exchange Commission (SEC) has expanded the definition of an “accredited investor,” allowing people with professional knowledge, experience or certifications to qualify as accredited investors. The new amendments to the accredited investor definition also increase the list of entities that can qualify as accredited investors.

“For the first time, individuals will be permitted to participate in our private capital markets not only based on their income or net worth, but also based on established, clear measures of financial sophistication,” SEC Chairman Jay Clayton said in a statement. “I am also pleased that we have expanded and updated the list of entities, including tribal governments and other organizations, that may qualify to participate in certain private offerings.”

Previously, the SEC rules defined an accredited investor as person who earned more than $200,000 annually for the past two years or more than $300,000 combined with their spouse. It also included people who had an individual or combined net worth of more than $1 million, excluding the value of their home.