WASHINGTON, D.C. (August 26, 2020) – The following is a statement from Christopher W. Gerold, President of the North American Securities Administrators Association (NASAA) and Chief of the New Jersey Bureau of Securities on today’s vote by the U.S. Securities and Exchange Commission to amend and expand its accredited investor definition as part of its proposal to harmonize the exempt offering framework under the Securities Act.

“The Commission’s vote today continues its deregulatory campaign to expand private markets, while showing little regard for the potential adverse effects on investors and the public markets. The SEC should focus on growing and promoting the public markets rather than incentivizing issuers to raise capital in the private markets. Further expansion of private markets comes at the expense of the public markets, which are essential to the health of our economy.

“The Commission squandered an opportunity to fulfill its mandate to protect investors by failing to address long overdue changes to the wealth and income standards defining accredited investors. For the past 38 years, the Commission’s failure to index these standards to account for inflation has eroded the investor protections they were designed to provide. Each year the Commission fails to address these standards only expands the pool of accredited investors, including investors who only meet the wealth standard based on their accumulated retirement savings. The Commission had the opportunity, but once again failed, to protect seniors or other vulnerable investors from the inherent risks associated with the lack of transparency and liquidity that exists in the private securities marketplace.”