SEC Considers Investor Test to Expand Accredited Investor Eligibility
From the desk of Jim Eccleston at Eccleston Law
The Securities and Exchange (SEC) Chairman Paul S. Atkins has directed Commission staff to work with FINRA on developing an examination that could allow more retail investors to qualify as accredited investors based on their financial sophistication, according to AdvisorHub.
The proposal would create another potential path for investors to access private market securities. The existing accredited investor framework for Regulation D private offerings relies primarily on income and net worth. The current thresholds require an individual to earn at least $200,000 annually or have a net worth of at least $1 million, excluding the value of a primary residence. Certain holders of brokerage licenses, including Series 7, 65 and 82 licenses, also qualify under amendments the SEC adopted in 2020.
According to AdvisorHub, the idea of changing the accredited investor definition has circulated in Washington for decades. The issue received additional attention in August 2025, when President Donald Trump issued an executive order directing the SEC to consider revisions to the definition. Several proposals before Congress also would make similar changes.
The SEC's July report responded to proposals presented during the Commission's March 45th Capital Formation forum. Those proposals included expanding the accredited investor definition to recognize additional measures of financial sophistication, including an investor examination and relevant experience.
Industry groups support that approach. Securities Industry and Financial Markets Association President Kenneth E. Bentsen Jr. told lawmakers that excluding individuals with professional experience or financial knowledge from purchasing restricted securities limits their participation in the capital markets and restricts private businesses' ability to obtain capital through accredited investors.
AdvisorHub reports that investor protection advocates have raised a different approach. Benjamin Schiffrin, director of Securities Policy at Better Markets, supports updating the accredited investor definition but opposes creating an eligibility examination.
According to AdvisorHub, Schiffrin argued earlier this year that inflation has significantly expanded the percentage of investors who meet the existing income and net worth thresholds. He cited an increase from 1.8percent of the investing public in 1983 to more than 18percent in 2022 and supports raising the financial thresholds instead.
Schiffrin also emphasized the importance of the net worth requirement because investors need sufficient financial resources to withstand losses from potentially risky private investments. He argued that the growing number of accredited investors has made Regulation D offerings a viable alternative to public offerings and has contributed to changes in the public markets.
Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.
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