Accredited Investor Definition Review Act
The Accredited Investor Definition Review Act would expand who can qualify as an accredited investor beyond wealth-based thresholds by adding certifications, designations, or credentials as a pathway to accreditation. Specifically, it directs the SEC to treat certain professional licenses or credentials as qualifying natural persons for accredited investor status, using a list the Commission designates in an order from 2020 and ensuring those credentials are at least as broad in measuring financial sophistication as current rules. The bill also imposes a periodic review process, requiring the SEC to refresh and potentially add to the list of qualifying certifications every five years (with an initial review within 18 months of enactment). The overall aim is to modernize and periodically update the standards for who may participate in private securities offerings.
Key Points
- 1Expands accredited investor eligibility to include individuals who hold specified certifications, designations, or credentials, as determined by the SEC.
- 2The new qualifying credentials must include those described in the SEC’s 2020 order designating certain professional licenses as qualifying natural persons for accredited investor status.
- 3The Commission must ensure these credentials are no less broad in reflecting financial sophistication than those described in the 2020 final rule amending Rule 501(a)(10) of Regulation D.
- 4Adds a periodic review requirement: within 18 months after enactment and at least every five years thereafter, the SEC must review and update the list of qualifying certifications, add substantially similar credentials, and adjust as appropriate for investor protection and public interest.
- 5The changes are to be implemented under the Securities Act of 1933 and the Dodd-Frank Act, with a focus on how credentials influence eligibility for private market investments.