WASHINGTON — The Securities and Exchange Commission should allow more investors to buy stakes in closely held startups such as Uber Technologies Inc., Airbnb Inc. and Lyft Inc., the agency’s chairman said Friday.
Michael Piwowar, the SEC’s acting head, said the commission should consider altering restrictions that lock out investors with only moderate wealth. He said the standards, which limit such private deals only to well-heeled “accredited” investors, don’t serve their intended purpose of protecting those people from the potential risks of putting money into higher-risk investments.
Currently, only individuals who meet certain wealth or income standards are allowed to invest in private stock offerings that are issued outside of public markets by companies. These range from stakes in startups to hedge-fund offerings.
“In my view, there is a glaring need to move beyond the artificial distinction between ‘accredited’ and ‘nonaccredited’ investors,” Piwowar said in a speech. “I question the notion that nonaccredited investors are truly protected by regulations that prevent them from investing in high-risk, high-return securities available only to the Davos jet-set.”
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