Summary#
H.R. 3348, the Accredited Investor Definition Review Act, would amend the Securities Act of 1933 and the Dodd-Frank Wall Street Reform and Consumer Protection Act. Its stated goal is to change how professional certifications, designations and credentials can qualify an individual as an accredited investor; that change would not guarantee investment access or a particular outcome.
- The Securities and Exchange Commission (SEC) would decide which credentials qualify, based on the public interest or investor protection. Its list would have to include the professional certifications identified in a 2020 SEC order.
- When choosing credentials, the SEC would have to consider attributes at least as broad as those described in the SEC’s 2020 rule.
- The SEC would have to review the credential list within 18 months after enactment, then at least once every five years.
- In those reviews, the SEC would have to add credentials it finds substantially similar in measuring financial sophistication, knowledge and experience, and could adjust or modify the list as it considers necessary or appropriate.
- The bill is not law. The supplied text does not set a start date or provide application, decision or appeal rules.
What it means for you#
- Individuals: If the SEC recognizes a credential you hold, it could help you qualify as an accredited investor. That status may matter where an investment offering relies on accredited-investor rules, but the bill does not guarantee that an offering will be available to you.
- The SEC: The agency would have to set and periodically review the qualifying-credential list. The bill does not create a new agency.
- Issuers and other market participants: The definition they use could change if the SEC adds or modifies qualifying credentials. This is an inference from the bill’s changes to the definition.
- The bill changes the credential part of the definition. It does not say that other parts of the definition are removed. The parent laws and referenced SEC rule were not supplied, so I could not verify how the bill would change current law in practice.
Money#
No cost information is in the available material.
- The SEC would have to conduct reviews, which would require agency work. The bill gives no estimate for staffing or cost and does not provide new funding.
- The bill does not set a fee, fine, tax or benefit.
What is unclear#
- What credentials the SEC would recognize beyond the professional certifications named in the 2020 order.
- How the SEC would decide whether a credential is substantially similar, or what process it would use to change the list.
- How individuals would show they hold a qualifying credential. The bill does not set an application or proof process.
- How this statutory change would interact with the current SEC rule. The bill refers to that rule, but its text was not supplied.
- When the change would take effect if enacted; the bill gives no start date.
Case for#
- A possible argument for the bill is that professional credentials can provide another way to recognize an individual’s financial knowledge and experience.
- Requiring regular reviews could let the SEC add credentials that meet the bill’s similarity test rather than leaving the list unchanged.
- The bill requires the SEC to consider investor protection and the public interest when deciding which credentials qualify.
Case against#
- The bill leaves much of the practical test to the SEC. It does not itself name most qualifying credentials or explain how people would establish that they hold one.
- The bill requires recurring reviews but provides no funding or estimate for the work.
- A credential-based path could affect who qualifies as an accredited investor, but the bill does not explain how that change would affect particular offerings or how it would fit with the rest of the current definition.