February 16, 2011
The Securities and Exchange Commission ("Commission") should consider the following in connection with its review of the definition of "accredited investor" pursuant to Section 413 of the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Act"):
If the Commission maintains a definition of accredited investor with reference to specific dollar amounts, those dollar amounts should be indexed for inflation (or deflation) each year. Rather than allowing the requirements for "accredited investor" status to relax over time due to inflation (or conversely allowing the requirements to be tightened due to deflation), the Commission should annually announce the applicable dollar thresholds each year by selecting a base year and a base amount and adjusting those thresholds by the CPI-U as calculated by the U.S. Department Of Labor Bureau of Labor Statistics. For a historical perspective on the rate of inflation, please see the table available at ftp://ftp.bls.gov/pub/special.requests/cpi/cpiai.txt.
Investors are accustomed to limits for tax-deductible contributions to 401(k) plans and IRAs being adjusted over time due to inflation. Similarly, they would understand an adjustment to the requirements to be an accredited investor.
Please note that the foregoing views are mine alone and do not necessarily represent the views of any current or former client, employer or other group. Thank you for the opportunity to comment in this proceeding.