SEC Staff Reports Data on the Growth of the Accredited Investor Population
Commentary by Steven Lofchie
In its "Review of the 'Accredited Investor' Definition," a report required under Dodd-Frank, the SEC considered the evolution of the definition of the term "accredited investor," and cited statistics detailing how the impact of the definition has changed over time.
The staff highlighted the following:
- From 1983, the number of households qualifying as accredited investors increased from 1.51 million to 24.3 million, going from 1.8 percent of all U.S. households to 18.5percent.
- If individual wealth and income thresholds had been increased proportionate to inflation since 1983, the net worth threshold would be raised from $1 million to over $3 million, the joint income threshold would be raised from $200,000 to over $600,000 and the joint income threshold would be increased from $300,000 to over $900,000.
- A meaningful portion of the increase in the number of accredited investors based on the wealth test is due to the inclusion of retirement assets in the wealth calculation.
- The number of initial filings of Form D increased by over six times since 2009. Staff noted that about one-third of Form filling fill-ins are made by investment funds.
Commentary
While the Review does not make recommendations, there is no dispute that the definition of "accredited investor" has become less exclusive or more inclusive, depending on one's viewpoint, since the definition was first adopted.