Analysis

SEC Leaves Door Open For More Private Market Expansion

By Tom Zanki (August 28, 2020, 9:12 PM EDT) -- The U.S. Securities and Exchange Commission's long-awaited changes to the definition of an accredited investor appear incremental, but they set the stage for further expansion of already rapidly growing private capital markets where investors have fewer protections.

The SEC's action Wednesday modestly expanded the category of accredited investors, which determines who is eligible to invest in unregistered securities, to add owners of select securities licenses, plus other wealth management firms and "knowledgeable employees" of private funds.

The expansion follows years of widespread criticism that the criteria for an accredited investor are flawed and antiquated. The definition historically has been limited to...

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