The full House plans to vote this week on the Accredited Investor Definition Review Act, H.R. 1579, which would broaden the accredited investor definition to include those holding certain designations, certifications and credentials.
The bill was introduced by Rep. Bill Huizenga, R-Mich., and passed the House Financial Services Committee with an overwhelmingly bipartisan 41-2 vote on April 26.
"The ability to participate in a private offering should not be limited to individuals that pass some type of federal government assets test," Huizenga said in a statement. "Instead, the ability to participate should be expanded to include all individuals that demonstrate they have a sufficient understanding of the offering and the risks involved."
The Accredited Investor Definition Review Act would update the Securities Act of 1933 and the Dodd-Frank Wall Street Reform and Consumer Protection Act.
What Is an Accredited Investor?
Accredited investors have access to investments that are not registered with regulators — in early-stage companies or certain cryptocurrency trusts, for example.
The Securities and Exchange Commission requires individual accredited investors to have:
- Net worth over $1 million, excluding primary residence (individually or with spouse or partner), or
- Income over $200,000 (individually) or $300,000 (with spouse or partner) in each of the prior two years, and reasonably expects the same for the current year.
Investment professionals holding Series 7, 65 or 82 licenses; clients of family offices; and certain people who work with private offerings can also be accredited investors.
The Bill
Huizenga's bill would require the SEC "to incorporate additional 'certifications, designations, or credentials that further the purpose of the accredited investor definition' within 18 months, and thereafter, assess the addition of certifications, designations or credentials every 5 years," he has explained.
