Experts warn SEC about perils of loosening private offering rules
September 25, 2019 | Mark Schoeff Jr. | InvestmentNews.com
Some experts are warning the Securities and Exchange Commission that loosening the rules on purchases of private investments could hurt the elderly and retirement savers, while alternatives industry organizations are touting their portfolio diversification benefits.
The dueling points of view are on display in comment letters regarding the SEC’s concept release on unregistered securities offerings. The deadline was Tuesday.
The concept release focused on simplifying and harmonizing regulations on the sale of nonpublic investments, or private placements.
One of the questions the SEC raised is whether it should amend the definition of an accredited investor. Currently, only people who meet certain wealth and income thresholds can buy private securities.
Michael Finke, an economics professor at the American College of Financial Services, and Tao Guo, an assistant professor at William Patterson University, cautioned that elderly investors who meet the sophisticated investor definition have diminished financial literacy and would be vulnerable to deregulation of the private market.
