SEC expressed that the current test for individual accredited investor status takes a binary approach to who does and does not qualify based only a person's income or net worth. Modernization of this approach is long overdue. The proposal would add additional means for individuals to qualify to participate in our private capital markets based on established, clear measures of financial sophistication.
The proposed amendments would allow more investors to participate in private offerings by adding new categories of natural persons that may qualify as accredited investors based on their professional knowledge, experience, or certifications. The proposal would also expand the list of entities that may qualify as accredited investors by, among other things, allowing any entity that meets an investments test to qualify.
"Professional investor" (PI) defined under the SFO is akin to accredited investor. In particular, Category-B PIs (corporate and individual) are subject only to the asset test, which is totally unrelated to "professionalism". I strongly recommend SFC to adopt SEC's proposal by amending the PI definition as well.
