SEC proposes allowing more investors access to private companies

www.reuters.com/article/us-usa-sec-investors/u-s-sec-proposes-allowing-more-investors-access-to-private-companies-idUSKBN1YM245

WASHINGTON (Reuters) – The U.S. Securities and Exchange Commission on Wednesday proposed changes to its decades-old definition of a professional investor in order to allow more Americans to buy shares in private companies.

The agency hopes the changes will boost retail investors’ access to the swelling pool of companies that are staying private for longer and longer, but it has sparked worries among some investor advocates who say even seasoned investors struggle to spot problems with private companies.

Under current SEC rules, individuals who wish to put their money into the high-risk, high-yield private markets must earn an individual annual income over $200,000, or a combined $300,000 in shared annual income between spouses, as well as hold at least $1 million in assets, excluding one’s home.