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SEC Amends “Accredited Investor” Definition

August 31, 2020

By: Kirsten Bartholomew & Ferran Arimon

On Wednesday, the Securities and Exchange Commission (“SEC”) adopted several amendments to the definition of “accredited investor.” The amendments are intended to improve the definition of “accredited investor” to more effectively identify individual investors and institutions that have the knowledge and expertise to invest in private markets by adding defined measures of professional knowledge, experience or certifications in addition to the existing tests for income or net worth.

Amendments to the accredited investor definition include:

  • addition of a new category that permits natural persons with certain professional certifications/designations or other credentials issued by an accredited educational institution, which the SEC may designate from time to time by order (in conjunction with the adoption of the amendments, the SEC designated holders in good standing of the Series 7, Series 65 and Series 82 licenses as qualifying natural persons);
  • for private funds, addition of natural persons who are “knowledgeable employees” of the fund;
  • clarification that limited liability companies with $5 million in assets may be accredited investors;
  • addition of a new category for any entity that own “investments” (as defined in Rule 2a51(b) under the Investment Company Act) in excess of $5 million and that was not formed for the specific purpose of investing in the securities offered;
  • addition of “family offices” with at least $5 million in assets under management and their “family clients” (as such term is defined under the Investment Advisers Act); and
  • addition of the term “spousal equivalent” to the accredited investor definition, allowing spousal equivalents to pool their finances for the purpose of qualifying as accredited investors.

These amendments will become effective 60 days after publication in the Federal Register. The complete text for the amendments can be found here.


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Kirsten

Kirsten Bartholomew focuses her legal practice on corporate and securities law, mergers and acquisitions.


A member of the firm’s Corporate Group, Kirsten works with clients to structure financing transactions in compliance with federal and state securities laws and represents both public and private companies in mergers, acquisitions, capital raising and corporate governance matters.

Previously Kirsten served as the general counsel to a specialty pharmaceutical company, worked as an attorney in private practice, and served as an adjunct law professor at Barry University, Dwayne O. Andreas School of Law.

Ferran

Ferran Arimon is an attorney in the firm’s Commercial Real Estate Group. He focuses his practice on commercial real estate transactions, including the acquisition, disposition, financing, development and leasing of various property types, as well as construction financings and re-financings. His practice also includes corporate and securities law.

Ferran regularly advises buyers, sellers, developers, landlords and tenants in real estate transactions related to multifamily developments, industrial properties, office buildings, shopping centers, restaurants, hotels, retirement communities and vacant land. He also assists clients with leasing contracts, title review and survey analysis, contract negotiation for purchase and sale, due diligence, negotiation of transfer documents and finalizing of transaction closings.

Additionally, Ferran has experience in corporate and securities law, mergers and acquisitions, and tax law. He has worked with clients to structure financing transactions in compliance with federal and state securities laws, having represented both public and private companies in mergers, acquisitions, capital raising, and corporate governance matters. He has also counseled clients on a broad range of tax issues and business planning issues from entity selection and formation to dissolutions.

Prior to law school, Ferran was an analyst at real estate investment management company in Miami. His role centered around underwriting, valuing, and identifying acquisition opportunities for distressed or value-add commercial and residential real estate acquired through joint ventures, direct Investments and non-performing loans portfolios.

Fluent in Spanish, Ferran regularly writes articles on a variety of emerging legal issues.

Ferran earned his law degree from the University of Florida Levin College of Law and his MBA from the University of Florida Warrington College of Business. Prior to law school, he received his undergraduate degree from Babson College, where he majored in finance and was a member of the men’s tennis team.

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