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Democratic AGs to SEC: Don’t Expand the Definition of “Accredited Investor”

  • Eleven Democratic AGs, led by California AG Xavier Becerra, filed a comment letter objecting to the Securities and Exchange Commission’s (“SEC”) proposed rule that would expand the SEC’s definition of “accredited investors.”
  • The SEC’s proposed rule seeks to add additional categories of individuals and institutions that would qualify as “accredited investors,” including individuals with certain licenses and certifications, certain limited liability companies, and registered investment advisor firms.
  • In their letter, the AGs argue that the SEC’s proposed rule would make it more likely that an individual unwittingly would lose their savings in private offerings to which securities laws do not apply. The AGs also urge the SEC to inflation-adjust “accredited investor” thresholds, gather data and study the outcomes of private security offerings before expanding the definition of “accredited investors,” and reject any proposals to consider individuals eligible to be “accredited investors” because they are advised by broker-dealers or investment advisors.