On February 1, 2016, the House of Representatives passed H.R. 2187, titled “Fair Investment Opportunities for Professional Experts Act.” The bill, whose stated purpose is to direct the SEC to revise its regulations regarding the qualifications of natural persons as accredited investors, seeks to expand the definition of accredited investor. Specifically, the bill proposes to add non-financial measures of sophistication to include the following persons in the pool of accredited investors: (i) any natural person who is currently licensed or registered as a broker or investment adviser by the SEC, FINRA, or any similar self-regulatory organization, or the securities division of a state responsible for licensing or registration of individuals in connection with securities activities; and (ii) anyone the SEC determines, by regulation, to have demonstrable education or job experience to qualify such person as having professional knowledge of a subject related to a particular investment and whose education or job experience is verified by FINRA or any similar self-regulatory organization. The bill also proposes to require the financial thresholds in the current definition of accredited investor to be adjusted for inflation every five years to the nearest $10,000, among other things.
H.R. 2187 has been referred to the Senate Committee on Banking, Housing, and Urban Affairs for consideration. The full text of the bill is available here.
With the recent flurry of activity, and especially given the fact that the definition of accredited investor has not been comprehensively re-examined since its adoption in 1982, it seems to be only a matter of time before the definition is amended. And judging from the SEC Advisory Committee’s recommendations, the agency’s own report, and the House bill, there seems to be a high degree of consensus among all concerned that the definition needs to be expanded, rather than contracted, to allow more diverse groups of individuals to participate in investment opportunities by measuring investor sophistication not just by income and net wealth, but also by educational, professional, and other qualifying criteria.
This post is part of a multi-post series on efforts to expand the definition of accredited investor. If you have any questions about the content of this blog or any securities law issues not discussed here, please contact us.
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 See generally H.R. 2187, 114th Cong. (as passed by H.R, Feb. 1, 2016). Unless otherwise specified, all references to the House bill, H.R. 2187, or the bill are to this citation.