Securities Regulation Daily Wrap Up, INVESTMENT ADVISERS—PIC urges SEC to expand qualified purchaser/buyer definitions to include family offices, (May 12, 2026)
The petition urges the SEC to align private offering investor definitions with the accredited investor framework adopted for family offices in 2020.
A rulemaking petition filed by the Private Investor Coalition ("PIC") asks the SEC to amend the definitions of "qualified purchaser" and "qualified institutional buyer" to include family offices and clients. The current definitions present unique problems for family offices and impose unnecessary administrative burdens. The petition urges the Commission to align its treatment of family offices in this context with amendments it made in 2020 to recognize family offices as accredited investors.
Family offices. PIC is a nationwide organization made up of single family offices with a common interest in public policy issues affecting that community. As the petition notes, family offices are usually companies having only "family clients," meaning family members, key employees, and entities as specified in the rule. Family offices are exempt from registration as investment advisers. As pertinent here, single family offices generally serve families with at least $100 million or more of investable assets.
The problem. Under Securities Act Rule 144A(a)(1), a "qualified institutional buyer" includes entities that in the aggregate own and invest at least $100 million in securities not affiliated with that entity. The definition of "qualified purchaser" presumes that "financially sophisticated" persons or those having sufficient assets under other SEC rules may be deemed to be a qualified purchaser.
The issue, as PIC sees it, is that these definitions do not apply at the family office level, but rather at the individual beneficial owner level. As a result, problems are raised for single family offices because many family clients are organized as trusts, charitable organizations, and investment vehicles for a single family and managed by a single family office. Significant administrative problems are then raised because the single family offices are required to measure qualified institutional buyer or qualified purchaser status for each individual family client and at each individual beneficial owner level.
Amended definitions. To resolve this problem, the petition asks that the SEC amend: the definition of "qualified institutional buyer" in Rule 144A(a), and the definition of "qualified purchaser" under Section 230.146. Both rules would be amended to include "family offices" and "family clients" in a manner consistent with the definition of "accredited investor" in Securities Act Rule 501(a), except with a $100 million threshold instead of a $5 million threshold.
The proposed amendments would only apply to family office investments that are directed by a person having knowledge and experience in financial and business matters so that the family office is capable of evaluating the merits and risks of a prospective investment.
The petition notes that similar issues prompted the Commission to amend the definition of "accredited investor" in 2020 to, among other changes, include certain family offices and their clients. The reasoning underpinning these amendments are directly relevant in this context, the petition says:
The premise for expanding the definition of accredited investor to include qualifying family offices and their family clients was that the offices have the knowledge, experience and sophistication to apply to investment decisions. This also applies to the definitions of qualified institutional buyer and qualified purchaser.
Family offices and their clients are often wealthy and financially sophisticated investors who hire legal and financial professionals to help manage their assets. And, given their assets, family offices and their family clients can sustain the risk of losing their investment.
PIC says that the SEC has long recognized the unique status of family offices and family clients and that it would be inconsistent policy to recognize this unique status for the definition of accredited investor, but not for the definitions of qualified institutional buyer and qualified purchaser, which serve similar purposes with respect to an investor’s status.
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