On December 18, 2019, the SEC approved a proposing release for public comment that would amend the definition of "accredited investor," as well as amend the definition of "qualified institutional buyer." Many structured note issuers include a Regulation D offering alternative in their continuous issuance programs, which would be affected by these amendments, if adopted. The Regulation D offerings typically rely on the Rule 506(b) safe harbor and allow for offers and sales to be made solely to "accredited investors." The changes set forth in the SEC's proposing release would have the effect of broadening the potential universe of individuals and entities that might qualify as accredited investors. In particular, the proposed amendments to the accredited investor definition would add new categories of natural persons based on professional knowledge, experience or certifications (such as Series 7, 65 and 82 licenses) and would leave intact the current net income and asset tests. Knowledgeable employees of private funds also would be considered accredited investors eligible to invest in their funds. The proposed amendments would also add new categories of entities, including a "catch-all" category for any entity owning in excess of $5 million in investments so long as it is not formed for purposes of investing in the offered securities. Family offices with at least $5 million of assets under management and their family clients would be considered accredited investors. Qualified institutional buyers (QIBs) would be considered accredited investors, and certain limited liability companies would also qualify as accredited investors. The proposed amendments would similarly expand the definition of a QIB to include additional entities.


Originally published in REVERSEinquiries: Volume 3, Issue 1.
Click here to read the articles in this latest edition.

Visit us at mayerbrown.com

Mayer Brown is a global legal services provider comprising legal practices that are separate entities (the "Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown Europe – Brussels LLP, both limited liability partnerships established in Illinois USA; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by the Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown, a SELAS established in France; Mayer Brown JSM, a Hong Kong partnership and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.

© Copyright 2019. The Mayer Brown Practices. All rights reserved.

This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.