On Wednesday, the Republican leader of the House Financial Services Committee, Patrick McHenry (R-NC), introduced the Equal Opportunity for All Investors Act of 2021 to expand who can qualify as an accredited investor.
The legislation directs the Securities and Exchange Commission to create an exam that individuals with investment knowledge and expertise can take to be certified as an accredited investor.
“The accredited investor regime keeps everyday Americans on the sidelines,” said Rep. McHenry. “My bill will allow more investors to qualify as ‘accredited investors,’ providing them with more opportunities to invest their money the way they want…”
Historically, individual investors must meet specific income or net worth tests to invest in the private markets. Accredited investors typically have an individual income of $200,000, a joint income of $300,000, or a net worth that exceeds $1 million – not including a primary residence.
The bill states that an individual who is certified as an accredited investor through an SEC exam “understands and appreciates the risks of investing in private companies,” and that the exam “is designed to ensure that an individual with financial sophistication or training would be unlikely to fail.”