WASHINGTON (Reuters) – The U.S. Securities and Exchange Commission (SEC) on Wednesday voted to adopt 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 to the 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.
“For the first time, individuals will be permitted to participate in our private capital markets not only based on their income or net worth, but also based on established, clear measures of financial sophistication,” SEC Chairman Jay Clayton said in a statement.
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