New Bill Would Cut Thresholds for Accredited Investors
The bill runs counter to the SEC's stated goal of increasing the income and net worth thresholds.
Rep. Alex Mooney, R-W.Va., has introduced the Investment Opportunity Expansion Act, which would lower the financial threshold to qualify as an accredited investor — which runs counter to the Securities and Exchange Commission’s plan to increase the thresholds.
The SEC regulatory agenda states that the agency plans to issue in April an update to the financial thresholds in the accredited investor definition. According to the SEC’s rulemaking agenda, SEC Chairman Gary Gensler intends to amend “the accredited investor definition by increasing the annual income and net worth thresholds.”
Nick Morgan, a partner at Paul Hastings and a former SEC attorney, told ThinkAdvisor Wednesday in an email that, based on the bill’s limited language and its title, Mooney’s bill “relates to the same accredited investor issue the SEC has been discussing, but goes in the opposite direction from what the majority of the SEC Commissioners have signaled as wanting.”
Mooney’s legislation “would likely lower the financial thresholds necessary to qualify as an accredited investor, whereas Commissioner Crenshaw and others have suggested the income and wealth thresholds should be increased,” Morgan explained.
The bill’s language suggests that for certain offerings “the income and net worth requirements would not serve to keep out investors completely,” Morgan said. “Rather, so long as the investment was not greater than 10% of the investor’s net assets or annual income, it wouldn’t matter how small the investor’s income/net worth. Interesting concept.”