House passes bipartisan bill to expand definition of accredited investor

  • July 18, 2018
  • 7:30 pm ET
Maxine Waters and Jeb Hensarling

The U.S House of Represented passed a bill that broadens the SEC’s definition of an “accredited investor” to allow some investors to become accredited who don’t otherwise have sufficient net worth or income to qualify.

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On Monday, Jeb Hensarling, a Texas Republican who chairs the House Financial Services committee, and Maxine Waters, a California Democrat, introduced the House Amendment to S. 488, the JOBS and Investor Confidence Act of 2018 to the House.

The bill — which includes 32 pieces of legislation and passed in a near-unanimous 406-4 bipartisan vote — widens the scope of what the Securities and Exchange Commission (SEC) is willing to consider a qualified investor.

Hensarling had this to say about it:

“The JOBS and Investor Confidence Act of 2018 will help sustain 3% economic growth and ensure we are able to compete globally with countries like China. By helping entrepreneurs access the capital they need to launch their companies and to go and stay public, this bill ensures that America’s garages have fewer old cars and more new startups.”

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The specific piece of legislation affecting accredited investors is “Title IV: H.R. 1585, Fair Investment Opportunities for Professional Experts,” which amends the Securities Act of 1933 to modify the definition of accredited investor to include:

  1. persons whose individual net worth, including their spouse’s, exceeds $1,000,000, excluding the value of their primary residence;
  2. persons with an individual income greater than $200,000, or joint income with one’s spouse greater than $300,000;
  3. persons with a current securities-related license; and
  4. persons whom the U.S. Securities and Exchange Commission (SEC) determines have demonstrable education or job experience to qualify as having professional subject-matter knowledge related to a particular investment, with the Financial Industry Regulatory Authority (FINRA) or an equivalent self-regulatory organization verifying the education and job experience of such individual

The 4th item, “demonstrable education or job experience,” is a critical addition as it will allow smaller private companies and qualified investors access to a wider range of investment opportunities. That should be a welcome change for those without sufficient net worth looking to invest in projects that are exclusive to “accredited investors.”

Per the House Financial Services statement, Senate Majority Leader Mitch McConnell (R-KY) has committed to bringing the bill up for a vote when it moves on to the Senate.

Here’s the complete bill for House Amendment to S. 488, JOBS and Investor Confidence Act of 2018. You can also find a summary on the House Financial Services site.


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