The landscape for private market investments is always evolving, and the Equal Opportunity for All Investors Act is now paving the way for more non-accredited investors to become eligible to invest in private real estate investments.
The Act has made significant progress, passing the House of Representatives with overwhelming support.
We delve into the details of this Act, its implications, and the potential impact it may have for increasing access to private real estate for many investors.
If you want access to opportunities such as unregulated investments not registered with the U.S. Securities and Exchange Commission (SEC), you'll need to become an accredited investor.
An accredited investor can be an individual who meets specific requirements or an entity such as a corporation or financial institution.
The definition first became prominent with the passage of Regulation D in 1982, which provides a number of exemptions from the registration requirements of the Securities Act.
To qualify as an accredited investor today, you must have one of the following:
These households control 75% of the wealth.
The Equal Opportunity Act aims to update the accredited investor definition and provide an alternative pathway for non-accredited investors.
Representative Flood introduced the Equal Opportunity for All Investors Act of 2023 in May 2023.
He outlined that the bill aims to expand the accredited investor definition to include individuals certified through an SEC-written exam administered by FINRA.Rep.
Flood argues that wealth should not be the sole determinant of investment know-how and proposes a pathway for knowledgeable investors to participate in private markets.
The bill directs the SEC to create a thorough accredited investor exam that includes parameters to ensure understanding of the differences and risks between private and public offerings.
Rep. Flood highlights the bipartisan nature of the bill and urges his colleagues to support it.
The examination program outlined in the Act is designed to ensure that individuals seeking accreditation demonstrate financial sophistication and competence in various aspects of investing.