New Bill Proposes Credential-Based Definition for Accredited Investors

Representative Bill Huizenga (R-Mich.), vice chair of the House Committee on Financial Services, introduced this week H.R. 3348, or the Accredited Investor Definition Review Act, to the U.S. House of Representatives with the goal of expanding the accredited investor definition.

The legislation seeks to amend the Securities Act of 1933 and the Dodd-Frank Wall Street Reform and Consumer Protection Act by codifying and expanding the qualifications for accredited investor status. Under current Securities and Exchange Commission rules, individuals typically qualify as accredited investors based on net worth or annual income thresholds. H.R. 3348 would shift the focus toward financial sophistication, allowing individuals to qualify based on specific professional certifications, designations, or credentials deemed appropriate by the SEC, a move intended to enhance access to private offerings.

Specifically, the bill mandates that the SEC recognize existing licenses, such as Series 7, Series 65, and others, as outlined in the SEC’s 2020 rule. It would also grant the SEC the authority to add similar credentials over time.

Additionally, the bill aims to amend Section 413(b) of the Dodd-Frank Act to require the SEC to review and update the list of qualifying certifications at regular intervals. The first review would be due within 18 months of enactment, with subsequent reviews required at least every five years.

H.R. 3348 was referred to the House Committee on Financial Services upon introduction. A committee hearing has been scheduled for Tuesday, May 20, at 10:00 a.m. If approved by the committee, the bill would proceed through the standard legislative process.

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