Outlook good for expanded accredited investor definition after strong approval in House

Sailing through the chamber Monday, 391-2, bill includes changes to who is considered a sophisticated investor eligible to participate in private placements

Dec 6, 2016 @ 1:07 pm

By Mark Schoeff Jr.

+ Zoom

Congress could act before the end of the year to allow more people to invest in unregistered securities, including retail investment advisers and brokers.

Late Monday, the House passed legislation, 391-2, that rolled up six measures the chamber approved earlier in the year to help small businesses raise capital.

One of them would expand the accredited investor standard, which sets parameters for who is considered a sophisticated investor eligible to participate in private placements.

The House passed the six bills as a package, the Creating Financial Prosperity for Businesses and Investors Act, in order to tee it up for expedited approval by unanimous consent in the Senate, which can be done by a voice, rather than roll call, vote.

The tactic could be stymied, however, by an effort led by Sen. Mark Warner, D-Va., to hold up the unanimous consent process until the Senate addresses legislation to help retired mine workers.

The House and Senate are expected to conclude the lame-duck session of Congress sometime over the next week.

The Securities Industry and Financial Markets Association urged Congress to approve the repackaged House bill.

The measure “rightfully focuses on promoting capital formation and decreasing unnecessary friction in our securities laws while upholding necessary customer and market protections,” SIFMA president and chief executive Kenneth Bentsen Jr. said in a statement.

The six-bill measure includes legislation first approved in February by a 347-8 vote that would broaden the parameters for an accredited investor.

Current rules limit accreditation to investors who have more than $1 million in net worth, excluding the value of their home, or earn more than $200,000 annually.

Under the reform bill, the accredited investor definition would encompass people with securities-related licenses, such as investment advisers and brokers, and those who have education or experience related to a particular investment, such as a doctor who wants to participate in a biomedical startup.

Under the Dodd-Frank financial reform law, the Securities and Exchange Commission must regularly review the accredited investor standard. Last December, the agency released a staff report about options for reforming the criteria.

The SEC Investor Advisory Committee also has expressed support for an update, while calling for appropriate investor protections to be included.

0
Comments

What do you think?

View comments

Recommended for you

Latest news & opinion

The appeal and pitfalls of holding unconventional assets in retirement accounts

While non-traditional asset classes held in individual retirement accounts may have return and portfolio diversification benefits, there are "unique complexities" that limit their value for most investors.

Wells Fargo's move to boost signing bonuses could give it a lift

Wirehouse is seen as trying to shore up adviser ranks that took a hit after banking scandal

Report predicts $400 trillion retirement savings gap by 2050

Shortfall driven by longer life spans and disappointing investment returns.

Wells Fargo will ramp up spending to lure brokers

Wirehouse, after losing 400 brokers in first quarter, is bucking trend among rivals who have said they are going to cut back on spending big bucks recruiting veteran advisers

Trump is gutting rules that Corporate America hates

With executive orders, bureaucratic actions and unprecedented use of an obscure statute, the administration has killed or postponed dozens of regulations.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print