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On August 26, 2020, the Securities and Exchange Commission (“SEC”) issued a press release indicating that it had adopted amendments to the definition of “accredited investor.” The amendments, among other things, added to the list of individuals who qualify as accredited investors, holders in good standing of a Series 7, Series 65, or Series 82 license. The amendments also updated the definition of accredited investor to include, with respect to investments in private funds, natural persons who are “knowledgeable employees” as defined in Rule 3c(5)(a)(4) of the Investment Company Act of 1940. This change could prove significant for private funds with under $5 million is assets under management which wish to allow certain employees to participate in the private fund’s offering.  These changes became effective on December 8, 2020.

Companies that frequently reuse their prior subscription agreements should now consider updating those documents to reflect these changes to the definition of accredited investor.

The SEC’s release can be found here:

The Final Rule adopting such amendments can be found here:


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