SEC official: Stop spending time writing rules to protect millionaires
By Sarah N. Lynch
WASHINGTON (Reuters) - A top U.S. regulator on Thursday decried a push by some investor advocates to change the rules that define who can qualify to invest in riskier private security deals, saying it is straining resources and that "millionaires can fend for themselves."
"I am baffled by continued insistence from some quarters that we need to significantly revise the accredited investor definition" Securities and Exchange Commission member Daniel Gallagher, a Republican, told a forum on small business capital formation.
"The obsession with protecting millionaires, potentially at the cost of hindering wildly successful and critically important private markets, strains logic and reason," he added, generating some applause.
Gallagher's comments come as the SEC is mulling whether or not it should make changes to the definition of "accredited investor."
That critical definition determines who can invest in private offerings of stock or debt that are typically subject to less financial disclosure, and thus are riskier.
The rule states that to qualify as an accredited investor, an individual must have a net worth of $1 million, excluding the value of a primary residence, an individual annual income over $200,000 or a combined household income of $300,000.
Since the rule was written in the 1980s, the SEC has tinkered with the definition only once.
The commission excluded the home value in the net worth calculation in late 2011, after the change was mandated by the 2010 Dodd-Frank Wall Street reform law. Continued...