Wall Street’s top watchdog wants mom-and-pop investors to grab a slice of the next Facebook before it goes public — but critics fret that they’ll fall prey to the next WeWork.
Jay Clayton, chairman of the Securities and Exchange Commission, unveiled a proposal last week to water down requirements for becoming an “accredited investor” who can pour cash into hot startups alongside hedge funds.
Under rules that date back to the Great Depression, such investors must have at least $1 million in assets outside their homes or earn at least $200,000 a year.
Those thresholds, Clayton argues, have locked average joes out of the tech boom, while a tiny coterie of Silicon Valley and Wall Street investors have gotten rich off the privately traded shares of Uber, Airbnb and Spotify.
The new rule, approved last week in a 3-2 vote along party lines, would allow some small investors — including certain licensed financial advisers, private equity employees and spouses of accredited investors — to sidestep those requirements.