A proposal by the US Securities and Exchange Commission to amend the definition of "accredited investor" in Rule 501(a) of Regulation D — one of the categories of investor to which an issuer can offer and sell securities that have not been registered under the US Securities Act of 1933 — has made its way into a final rule.

This final rule, which amends the definition of accredited investor and will be effective sometime after October 31, among other things, clarifies the guidance applicable to sovereign wealth funds and other statutorily created foreign entities at one time provided on a case-by-case basis by the SEC (i.e., by way of no-action letters).

This new rule provides certainty to sovereign wealth funds, which meet the criteria described below, that they would qualify as accredited investors, thereby providing an easier path for certain investment activities by such institutions.

This article first appeared in Law360.

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