ADISA submitted a letter this week to the Securities and Exchange Commission’s request for comments concerning its Concept Release on Harmonization of Securities Offerings Exemption. In the letter, ADISA responded to one topic in particular and supported an expanded “accredited investor” definition mentioned in the Concept Release.
 
Current law defines accredited investors purely on the basis of wealth and their supposed ability to shoulder risk of financial loss. While ADISA appreciates the aspect of wealth and its importance in weathering financial risk, focusing solely on wealth may fail to adequately protect investors because it ignores an investor’s actual financial sophistication and knowledge.
 
ADISA feels that while criterion of a wealth threshold is well-meaning, as a sole measure it appears as too narrow, and suggests an investor’s financial sophistication should also be a manner of qualification. ADISA also recommends an indexing of the net worth threshold on a going-forward basis given the large adjustment already made by reconfiguring the threshold to omit primary residence.
 
The letter was drafted by ADISA Board members John Grady, Practus and Catherine Bowman, The Bowman Law Firm; as well as ADISA Executive Director John Harrison.
 
Read the letter in its entirety here.