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house Bill H.R. 2187

Should the Definition of “Accredited Investor” be Broadened for Those Who Pass an Exam?

Argument in favor

People who have experience in the financial services industry or have passed an SEC exam should be considered accredited investors, as it will lead to increased investment and economic growth.

T's Opinion
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02/04/2016
Nothing is more demeaning to liberty than to say "you are not smart enough to invest your own money as you see fit, we will use the power of the state to prevent you".
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George's Opinion
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02/08/2016
Securities Licensing allows a person to give you advice on how to invest your money. Why shouldn't that person have the authority to follow their own advice? This actually levels the playing field. An accredited investor is one who earns $200k+ per year or net worth over $1mm. If I'm bright enough to help those wealthy folks make good investments, why should the fact that I'm not wealthy preclude me from investing in the same vehicles? (Ps I have a bachelors in economics, a master's in accounting and hold the Series 7, 31, 63, 65 exams for almost a decade. Education is expensive.) There might be 0.1% of people in the world that have a more sophisticated understanding of risk, investment & portfolio theory than me. If I'm qualified to help rich people get richer, why shouldn't I be allowed to drink from the same well?
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joeykrug's Opinion
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02/06/2016
Lot of people misinterpreting this bill... it's meant to give power to regular people, not Wall Street. Wall Street folks already make the salary requirements to be accredited investors. That's literally the only "accreditation" now - salary or net worth
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Argument opposed

The SEC has regulations defining who can be considered an accredited investor for a reason, and that’s because not all investors have the financial resources or expertise to make risky investments.

Steven's Opinion
···
02/04/2016
We don't throw qualifications out the window, just to make it more popular. Firefighters are expected to be able to carry a grown man out of a burning building. Would you want your life to depend on the one that didn't have to meet the standard? Before you say the financial sector isn't the same thing look back on the last 10 years or so of our country and see what deregulation and looser standards have got us.
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CSpencerBrzezinski's Opinion
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02/23/2016
There are a multitude of investment opportunities available to non-accredited investors. Expanding this definition simply confuses the reality of traditional, sophisticated investors and those who might not have the financial credentials to back up their status. Those who are looking to invest large sums of money are held to traditional accreditation standards, and smaller investors still understand the inherent nature of investing - risk. This is just not an efficient way to spend $500,000 of government money.
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Lesia's Opinion
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01/31/2016
Ask regular Americans if anyone on Wall Street should have their lives made easier Really? NO
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What is House Bill H.R. 2187?

This bill would revise the Securities and Exchange Commission (SEC) rules under Regulation D to consider a person an accredited investor regardless of income and net worth requirements if the person certifies that they:

  • Is a person described in specified other requirements of Regulation D;

  • Has retained and used the services of certain banks, savings and loan associations, insurance companies, registered brokers or dealers, or other entities and their employees to make an investment decision;

  • Is licensed as an accredited investor by the Financial Industry Regulatory Authority (FINRA) after completing an exam administered by FINRA using the SEC’s criteria.

The SEC would establish criteria for FINRA to use in administering the exam to accredited investors who don’t meet Regulation D’s income and net worth requirements.

Impact

People who would be considered accredited investors under the revised definition, FINRA, and the SEC.

Cost of House Bill H.R. 2187

$500.00 Thousand
The CBO estimates that implementing this bill would cost less than $500,000 over the 2016-2020 period.

More Information

In-Depth: Accredited investors are considered to be more financially sophisticated than typical investors by federal regulators because of the financial resources at their disposal. Currently, the requirements to become an accredited investor include satisfying at least one of the following criteria:

  • Earn an individual income of more than $200,000, or a joint income of $300,000 in each of the last two years and reasonably expect to maintain that income level;

  • Have a joint or individual net worth exceeding $1 million;

  • Are a general partner, executive officer, director, or some related combination for the firm that is issuing securities.

The House Financial Services Committee passed this legislation by a vote of 54-2.


Media:

Summary by Eric Revell
(Photo Credit: Flickr user harshlight)

AKA

Fair Investment Opportunities for Professional Experts Act

Official Title

To direct the Securities and Exchange Commission to revise its regulations regarding the qualifications of natural persons as accredited investors.

bill Progress


  • Not enacted
    The President has not signed this bill
  • The senate has not voted
      senate Committees
      Committee on Banking, Housing, and Urban Affairs
  • The house Passed February 1st, 2016
    Roll Call Vote 347 Yea / 8 Nay
      house Committees
      Committee on Financial Services
      Investor Protection, Entrepreneurship, and Capital Markets
    IntroducedApril 30th, 2015

Log in or create an account to see how your Reps voted!
    Nothing is more demeaning to liberty than to say "you are not smart enough to invest your own money as you see fit, we will use the power of the state to prevent you".
    Like (9)
    Follow
    Share
    We don't throw qualifications out the window, just to make it more popular. Firefighters are expected to be able to carry a grown man out of a burning building. Would you want your life to depend on the one that didn't have to meet the standard? Before you say the financial sector isn't the same thing look back on the last 10 years or so of our country and see what deregulation and looser standards have got us.
    Like (6)
    Follow
    Share
    Securities Licensing allows a person to give you advice on how to invest your money. Why shouldn't that person have the authority to follow their own advice? This actually levels the playing field. An accredited investor is one who earns $200k+ per year or net worth over $1mm. If I'm bright enough to help those wealthy folks make good investments, why should the fact that I'm not wealthy preclude me from investing in the same vehicles? (Ps I have a bachelors in economics, a master's in accounting and hold the Series 7, 31, 63, 65 exams for almost a decade. Education is expensive.) There might be 0.1% of people in the world that have a more sophisticated understanding of risk, investment & portfolio theory than me. If I'm qualified to help rich people get richer, why shouldn't I be allowed to drink from the same well?
    Like (7)
    Follow
    Share
    Lot of people misinterpreting this bill... it's meant to give power to regular people, not Wall Street. Wall Street folks already make the salary requirements to be accredited investors. That's literally the only "accreditation" now - salary or net worth
    Like (4)
    Follow
    Share
    Investment fuels businesses. Opening this up to more people is a great thing.
    Like (4)
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    There are a multitude of investment opportunities available to non-accredited investors. Expanding this definition simply confuses the reality of traditional, sophisticated investors and those who might not have the financial credentials to back up their status. Those who are looking to invest large sums of money are held to traditional accreditation standards, and smaller investors still understand the inherent nature of investing - risk. This is just not an efficient way to spend $500,000 of government money.
    Like (3)
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    Ask regular Americans if anyone on Wall Street should have their lives made easier Really? NO
    Like (2)
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    It's not government's place to try to protect me from myself. Everyone knows investing is a risk. If I want to take on that risk anyway, with my own money, in something I've researched and believe is a worthwhile investment, who are you to tell me I'm not allowed to?
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    How can the experience of managing a large sum of money be packed into an exam? Accredited investors are deemed so because they manage large sums of money by virtue of having earned it, in the vast majority of cases.
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    They SHOULD have the financial wherewithal to meet the requirements of the SEC. If they can't, they don't have the expertise to make the risky investments mentioned. Who would want a broke financial investor managing their money. This is a no brainer! They must be getting their fund raising in place to be putting forth bills like this. Get your head out of my .... Pockets... And get to work! Good grief. This is a waste of time and tax payer dollars!!!!
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    No more new laws until we enforce the ones we have!
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    Wealth alone doesn't make a good or smart investor. A smart investor makes a smart investor. If you can pass the test you should be free to gamble your money away if that's how you want to spend it.
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    Enough already. There's risk in investing
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    If you passed the test then you should be able to control your own finances
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    Gov. is already too involved in protecting people from themselves, this is just another Nanny State (BS) regulation designed to get more of our money.
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    If they make the grade why wouldn't they reap the reward
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    More people can get better jobs
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    Who is the Federal Government to tell me if I can or can not take risk. Get the hell out of my business.
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    As a previous holder of a Series 7 license and insurance license in two states, I can assure you a license does not guarantee honesty or integrity. There are a lot of licensed folks out there only in it for the money. Don't mean to paint the industry with a broad brush, but it's my observation.
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    stay out of the private sector
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