SEC (Barely) Expands The Definition of Accredited Investor

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Most private stock offerings are limited to "accredited investors", i.e., wealthy people and entities.

This limit is designed to protect the vulnerable from unscrupulous business practices.

(There are important and IMO under-utilized exceptions but that's a story for another post.)

The AI rule, which dominates private capital raising, can be very frustrating for both entrepreneurs (who want access to more investors) and investors (who don't want to be blocked from good investment opportunities).

For years, many have clamored for a more targeted approach to expand the capital base without compromising investor protections.

Last week, the SEC took the first modest step in that direction in decades.

Specifically, the SEC provided a pathway based on training and professional certification (rather than wealth) for individuals to qualify as an AI.

For now, only people with Series 7, 65, and 82 licenses qualify.

On a go-forward basis, we can expect other certifications to emerge that open the door to AI status.

Not an immediate game changer -- but a prudent and sensible step in the right direction. Would love to see more in this direction.

More from the SEC here: https://www.sec.gov/news/press-release/2020-191

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Francesco Barbera

Francesco Barbera is a corporate attorney representing emerging growth companies in a wide range of industries, including software, technology, digital, fashion, health care, retail and e-commerce.


He counsels entrepreneurs, investors and established companies on the full range of their business activities, from formation through raising capital, growth and acquisition. He has special expertise in the representation of mission-driven organizations and social enterprises. 


Throughout his career, he has represented the National Broadcasting Corporation, the Grammy Museum, Ares Capital Management, Credit Suisse First Boston, as well as privately held businesses in internet, media and technology, mobile applications, consumer products, professional sports, film and television production, among others over the course of his career. 


Francesco began his legal career at two large, international law firms in Los Angeles, where he represented large and small enterprises in a broad range of transactions, from mergers and acquisitions to public and private securities offerings to the formation of partnerships and joint ventures.


Francesco is also the Co-Chairman of the Los Angeles chapter of Conscious Capitalism, Inc.A lifelong student of psychology and personal development, Francesco holds a Master’s Degree in Spiritual Psychology from the University of Santa Monica and has been trained and mentored by numerous leaders in the personal development arena, including Steve Chandler, Byron Katie and George and Linda Pransky. 

Francesco has also founded and represented non-profit initiatives.


He has served as outside counsel to the Los Angeles Leadership Academy, a charter school dedicated to training the next generation of social and political leaders, and he is the founder and former Executive Director of SpiritWalk, a non-profit fundraiser created to benefit the University of Santa Monica.  

Francesco’s writing has appeared in The American Lawyer, California Lawyer, Slate, and others. He served as the Supreme Court columnist and Executive Editor of the Harvard Law Record and was the founder and editor-in-chief of the Penn History Review, the first Ivy League journal in the country dedicated to the publication of undergraduate historical research.


Francesco is an honors graduate of Harvard Law School, cum laude, and the University of Pennsylvania, summa cum laude and Phi Beta Kappa.