Capstone North Funding Corp. reposted this
Dear LinkedIn Community, One of the key priorities on the U.S. Securities and Exchange Commission (SEC) agenda, under the leadership of Chair Gary Gensler, is the re-evaluation of Regulation D (Reg D) and the definition of an Accredited Investor. These amendments currently ranked seventh on the list of “improvements,” have raised concerns about their potential impact on the investment ecosystem and private companies. Reg D is the cornerstone of US private markets, facilitating the raising of over a trillion dollars annually. Recent reports indicate that the total amount raised under Reg D in 2022 exceeded a staggering $2.2 trillion. While a significant portion of these funds supports pooled investment funds, Reg D plays a pivotal role in providing early-stage firms with access to growth capital. Many renowned tech giants at one point or another utilized this exemption before going public, underscoring its importance. Any changes to this exemption could risk destabilizing a previously thriving market, potentially impeding economic activity and stifling innovation. The current definition of an Accredited Investor, established in the 1980s, is widely acknowledged as needing an update. The definition is currently based mainly on income and net worth, while this definition overlooks factors such as education and experience. A popular recommendation is to introduce a sophistication qualification, where interested investors would take a brief test to demonstrate their understanding of the inherent risks in investing in private companies and the structure of securities offerings. Continue reading by clicking on the link below:
