Industry observers weighed in quickly Wednesday with both applause and criticism after the Securities and Exchange Commission released its long-awaited revised accredited investor definition.
While not expanding the 38-year-old wealth thresholds, the agency did allow investors to qualify based on defined measures of professional knowledge, experience or certifications — including certain Financial Industry Regulatory Authority licenses — in addition to the existing tests for income or net worth.
(Please take our Twitter poll on which designation you’d add to the SEC’s new accredited investor definition.)
“The SEC contemplates being able to add other designations or credentials — like the CFA, other FINRA exams, or other educational credentials — by order rather than by rulemaking,” Jennifer Schulp, director of Financial Regulation Studies at the Cato Institute, told ThinkAdvisor in an email.
“That streamlines the process to a degree, but I would not expect to see any additions in the near term,” Schulp said.
“By the SEC’s logic, individuals holding certain securities licenses are sophisticated enough to invest, but the SEC continues to lock out clients who rely on the advice of those professionals from the same investment opportunities,” Schulp added.
The Investment Adviser Association lodged the same complaint in an emailed statement.
IAA said it was “disappointed” that the commission failed to act on the group’s recommendation “to allow discretionary clients of fiduciary investment advisers access to those markets.”
The association will continue to work with the SEC “to identify categories of sophisticated individual investors who, with appropriate investor protections in place, can also participate in private capital markets,” it said.
IAA said it is pleased, though, that the SEC “has expanded the ‘accredited investor’ and ‘qualified institutional buyer’ categories to include those institutional investors that have been previously left out.”
Exponential ETFs founder Phil Bak tweeted a similar complaint: “Series 7, 65 or 82 qualify as accredited but CFA or CAIA do not?”