Think Advisor (June 5, 2023) - The full House passed late Monday two more accredited investor-related bills.
The Accredited Investor Definition Review Act, H.R. 1579, sponsored by Rep. Bill Huizenga, R-Mich., updates the list of certifications that an investor must satisfy to qualify as an accredited investor.
The Fair Investment Opportunities for Professional Experts Act, H.R. 835, sponsored by Rep. French Hill, R-Ariz., expands the accredited investor definition, “thereby increasing the pool of investors for small and emerging companies in need of capital — especially minority entrepreneurs who often struggle to secure funding — and providing more Americans with additional investment opportunities,” according to Hill.
Micah Hauptman, director of investor protection for the Consumer Federation of America, told ThinkAdvisor previously that “CFA strongly opposes” French’s bill.
“It would legislatively enshrine an approach to accredited investor based on financial thresholds we know don’t work at identifying a population of investors that can fend for themselves without the protections afforded by the public markets,” Hauptman said.
Hugh Berkson, president of the Public Investors Advocate Bar Association, or PIABA, told House Financial Services Committee Chairman Patrick McHenry in a recent letter that the various bills to expand the definition of accredited investor require additional language to call on the SEC to study retail investor complaints against RIAs generally.
“If the Congress is intent on expanding access to private securities, it must include some measure of oversight to ensure the SEC is cognizant of the serious issues faced by retail investors at the hands of their trusted RIAs,” Berkson said.
“The bills, if passed without such strictures, will expose countless Boomers who are retiring in record numbers and susceptible to compelling sales pitches to invest (and ultimately lose) their irreplaceable 401(k) funds,” he explained.
On June 1, the full House passed The Equal Opportunity for All Investors Act of 2023, introduced by Reps. Mike Flood, R-Neb., and Wiley Nickel, D-N.C., which requires the Securities and Exchange Commission to devise an accredited investor certification exam.
“H.R. 2797 provides a pathway for Americans to become accredited investors by allowing individuals seeking status to take an examination,” to be established by the SEC and administered by the Financial Industry Regulatory Authority, Flood said.
“It is my firm belief that the accredited investor definition should not be tied exclusively to wealth,” Flood said in a statement after the bill’s passage. “Instead, we should unlock opportunities for knowledgeable investors that may not come from means.”