SEC proposes expanding access to private markets

By Ken Tysiac

More investors would have access to private capital markets under a proposal issued Wednesday by the SEC.

The proposal would amend the definition of “accredited investor” to permit more investors to participate in private offerings. Accredited investors are institutions and individuals deemed by the SEC to possess the knowledge and expertise to participate in private capital markets.

Opportunities for investment would be expanded for some investors under the proposal, which also has the potential to increase the amount of capital available to presenters of private offerings. But if investors without the appropriate amount of sophistication or wealth become accredited, they could be in jeopardy of making unsound investments that they cannot afford.

SEC Chairman Jay Clayton said in a news release that modernization is long overdue for the current test for accredited investors, which bases qualification on a person’s income or net worth.

“The proposal would add additional means for individuals to qualify to participate in our private markets based on established, clear measures of financial sophistication,” Clayton said. “I also am pleased that the proposal specifically recognizes that certain organizations, such as tribal governments, should not be restricted from participating in our private capital markets.”

Comments will be accepted for 60 days following publication of the proposal in the Federal Register.

The SEC on Wednesday also:

  • Adopted risk mitigation techniques for uncleared security-based swaps.
  • Adopted a package of rule amendments, guidance, and a related order to expand and change the framework for regulating cross-border security-based swaps, including single-name credit default swaps.
  • Proposed rules that would require resource extraction issuers to disclose payments made to foreign governments or the U.S. federal government for the commercial development of oil, natural gas, or minerals.
  • Approved the 2020 PCAOB budget and accounting support fee.

Ken Tysiac ( is the JofA’s editorial director.


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