Why It Matters: SEC Modernizes Its Definition of an Accredited Investor
José Padilla is an attorney and the owner of Padilla Law PLLC, where he represents startups and investors. His practice focuses on the formation, seed and VC financings, private equity, acquisitions, strategic corporate transactions, and general advisory regarding corporate and financing strategy. In August 2020, the Securities and Exchange Commission (SEC) amended the definition of accredited investor. The SEC developed qualifications and rules under the Securities Act of 1933 to protect individuals from risky investments.Accredited investors can more freely invest in hedge funds' lucrative and risky world, private equity, venture capital, and equity crowdfunding. Private or unregistered securities are considered inherently riskier, so the Securities Act empowered the SEC to creat...