What You Need to Know
- The measure would direct the SEC to create an exam to certify accredited investors.
- The bill would expand who may qualify as an accredited investor, Rep. Patrick McHenry said.
- The SEC said in June that it planned to amend rules around the accredited investor definition, which was expanded in August 2020.
Rep. Patrick McHenry, R-N.C., ranking member of the House Financial Services Committee, introduced legislation Wednesday to expand who qualifies as an accredited investor.
The bill, the Equal Opportunity for All Investors Act of 2021, directs the Securities and Exchange Commission to create an exam that people with investment knowledge and expertise can take to be certified as an accredited investor.
“The accredited investor regime keeps everyday Americans on the sidelines,” McHenry said in a statement. “My bill will allow more investors to qualify as ‘accredited investors,’ providing them with more opportunities to invest their money the way they want.”
Investment in most private companies is limited to “accredited investors,” McHenry said, “which are generally people with either $1 million of net worth (excluding the value of their house), individuals who make $200,000, or families that make $300,000. This excludes most Americans from investing in some of the highest-growth phases of companies.”
The bill states that an SEC exam would ensure that those certified as an accredited investor understand and appreciate “the risks of investing in private companies,” and that the exam would also be “designed to ensure that an individual with financial sophistication or training would be unlikely to fail.”