2) The exemption's basic elements are 1) a maximum offering amount; 2) limitations on the amount of securities that a nonaccredited investor
can purchase; 3) mandatory use of a licensed dealer or intermediary; and 4) escrowing of investor proceeds until a minimum target amount has been raised.
An investor who does not come within one of the accredited investor categories is a nonaccredited investor
Historically, nonaccredited investors
could only invest in the traditional stock market, where companies are at a more mature stage of growth than a startup company.
He questioned "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.
43) In 2014, only eight percent of Regulation D offerings included nonaccredited investors
Moreover, he notes that many of the companies that will seek investments from nonaccredited investors
will not be the type that typically go public or get acquired.
Janice Schakowsky); Siegel, supra note 14, at 794 (arguing nonaccredited investors
The forthcoming Title III rule is often referred to as "retail crowdfunding" because it will allow nonaccredited investors
to invest in offerings of up to $1 million.
While not all '40 Act liquid alternative funds can be classified this way, many are set up to offer a hedging strategy while maintaining certain liquidity, diversification and redemption standards, as required by federal regulations for financial products sold to nonaccredited investors
The Act allows small businesses and other enterprises to solicit financing from nonaccredited investors
via the Internet.
While the SEC noted the importance of monitoring the progress of the new rules that allow nonaccredited investors
to invest in startups and other private businesses, financial services firms applauded the SEC's adoption of the crowdfunding rules.
The prohibition on general solicitation and advertising and the latitude to sell to nonaccredited investors
no longer exist.