SEC may allow individual investors to buy private equity

As the demands for readier access to private equity investment opportunities by individual investors continue to increase, the Financial Times reports on a move in the US that could have significant implications for European individual investors.

The Securities and Exchange Commission [SEC] is reviewing a proposal which would relax the rules governing who can buy and sell restricted securities including private equity. It would require an amendment to Rule 144a and just such a change has been requested by the New York Private Placement Exchange [NYPPe], the new private equity trading network, in a May letter to the SEC.

NYPPe’s aim is to have the SEC broaden its definition of accredited investors to include those with a net worth of more than $1m or annual incomes of more than $200,000. Currently investors are only exempt from the restrictions on non-public share sales if they sell to a qualified institutional buyer with $100m or more in assets.

Many private equity firms in Europe are watching these moves with great interest as the SEC is seen as the bell-weather of financial regulators and where they go other regulators will follow.