The House passed Monday the Equal Opportunity for All Investors Act, H.R. 3339, a bipartisan bill that seeks to allow individuals to qualify for private investment opportunities if they can pass an exam.
Under the bill — sponsored by Reps. Sarah McBride, D-Del.; Mike Flood, R-Neb.; Mike Lawler, R-N.Y.; and Cleo Fields, D-La. — the Securities and Exchange Commission would direct the Financial Industry Regulatory Authority to create and administer a "new, rigorous investment exam" to earn accredited investor status.
"I’m grateful to see my bill receive bipartisan support at every step in the House, and it now awaits Senate consideration," Flood said in a statement.
“Our bill will unlock capital for entrepreneurs and small business owners who’ve been left out for far too long,” added McBride in another statement. “Current law allows only millionaires to invest in private markets — shutting out countless Americans, especially women, veterans, and people of color, based on wealth, not knowledge.”
The current definition of an accredited investor restricts participation in private capital markets to individuals with over $1 million in net worth (excluding their primary residence) or annual income over $200,000.
It would freeze the financial thresholds and tie them to inflation.
Supporters of the accredited investor standard say it helps protect unsophisticated investors from losing money in vehicles that are illiquid, complex or lightly regulated. Opponents say it shuts investors out of potentially lucrative wealth creation opportunities. SEC Commissioner Hester Peirce has said the accredited investor standard should be eliminated.
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