BIG Changes to "Accredited Investor" Requirements

[Benjamin Carver]

The House of Representatives passed a new law called the "Equal Opportunity for All Investors Act" with a big vote. This law is meant to change who can be considered an accredited investor in the U.S. In the past, being an accredited investor usually depended on having a lot of money:

- investors are defined as those who make at least $200,000 annually

- or have a net worth of more than $1 million

But now, there's a new way in the works.

Under this proposed law, people can become accredited investors by passing a test created by the government and administered by a financial organization. This is a big deal because it would allow more people to join the group of accredited investors, opening the door to private investments.

The law's author, Rep. Mike Flood, says it's not just about how much money you have. It's also about knowing how these investments work. He thinks the law will help more people get into private investments, but it will make sure they know what they're getting into.

Now, the law goes to the Senate, but it's not clear what will happen there because there isn't a similar law in the Senate yet. So, we'll have to wait and see what the Senate decides. This change is a big deal and could affect how people invest in the U.S.

What are you thoughts?

[Taylor L.]

I'm for it because I support freedom of choice on the part of investors. However, this doesn't fully absolve syndicators of the responsibility of understanding their investors' situations and qualifications.

Syndications are highly illiquid investments; someone who passes this test but still has a net worth of, say, $100,000, should not invest in the typical syndication that has a $50k minimum. If these tests are legally approved, syndicators should continue to evaluate and understand their investors' financial positions prior to bringing them into a deal.