SEC advisory panel recommends new approach to accredited investor label
The criteria that defines who is an accredited investor has not changed since 1982 and the SEC is now seeking to reform these standards. A typical accredited investor according to definition has a $1 million net worth (not including their house) or an income of $200,000 plus. Given that there has been inflation and a few large financial downturns since 1982, is it time to finally reform these parameters? A great deal of emphasis is being put on the investor knowledge and sophistication. If an individual meets just the financial criteria that does not particularly mean that they are sophisticated. A million dollars in net worth does not give an investor the knowledge needed to pick through a private placement memorandum. So over the next month the SEC will review the standards and decided whether to replace the old numerical standards with sophistication standards.