On June 16, MFA submitted a comment letter to the SEC in response to the staff report on the review of the definition of accredited investor. In our letter, we support maintaining clear, objective standards in the definition that are based on the income and net worth of an investor, and ensuring that an accredited investor continues to include a person who meets one of the listed qualification methods, or who an issuer reasonably believes meets one of the qualification methods, at the time of the sale of the securities to the person. We also support the staff recommendations to increase the income and net worth thresholds to account for the effect of inflation, which would help to ensure that the thresholds have not been diluted over time. In addition, the letter further recommends that the SEC:
- Permit “knowledgeable employees” of private fund managers to qualify as accredited investors for investments in private funds of their employers;
- Further harmonize existing sophisticated investor tests by including “qualified purchasers” as accredited investors, and by amending the definition of “qualified client” to include accredited investors;
- Clarify that the grandfathering provision would apply to all securities of the particular issuer or its wholly-owned affiliates, and not only to the same securities currently owned by the investor, which is consistent with protecting the investor from dilution in the future; and
- Consider including in the definition individuals who are certified public accountants or chartered financial analysts, and individuals who have received an MBA.
