H.R. 3394: Fair Investment Opportunities for Professional Experts Act

This bill, known as the Fair Investment Opportunities for Professional Experts Act, proposes to amend the Securities Act of 1933 to redefine and expand the criteria for what qualifies an individual as an "accredited investor." Here are the main points of the bill:

Purpose of the Bill

The bill aims to allow more individuals, particularly those with relevant education or experience in finance, to participate in investment opportunities currently limited to accredited investors. The goal is to create fair investment opportunities for professional experts who may not meet traditional financial criteria.

Changes to the Definition of Accredited Investor

The bill outlines several key changes to the definition of an accredited investor:

• The financial wealth threshold for individuals is set at a net worth exceeding $1,000,000 (excluding the person's primary residence) or income above $200,000 for the past two years ($300,000 jointly with a spouse), with an expectation of reaching that level again in the current year.
• The bill attempts to exclude the individual's primary residence from being counted as an asset and certain liabilities related to that residence when calculating net worth.
• Individuals who are licensed or registered as brokers or investment advisers are included in the new definition.
• The bill introduces a provision where individuals with demonstrated education or job experience, verified by a self-regulatory organization, can be deemed accredited investors. This indicates a focus on professional knowledge related to investments, rather than purely on wealth.

Regulatory Changes Required

The Securities and Exchange Commission (SEC) is tasked with updating the existing rules to align with these new definitions within 180 days following the enactment of the bill. This implies a regulatory review of how accredited investors are defined under Regulation D.

Impact on Investors

The proposed changes might broaden access to investment opportunities, particularly in private markets, for individuals who possess professional knowledge but may not meet traditional income or net worth criteria. This could potentially lead to greater participation in investments that were previously restricted to wealthier individuals.

Impact on the Marketplace

By allowing more individuals to qualify as accredited investors, the bill could diversify the investor base in private equity, venture capital, and other investment opportunities, providing more capital to startups and emerging companies.

Relevant Companies

None found