Reform of Accredited Investor Rule Proposed to Increase Investment Access
President Trump aims to attract foreign investment with his proposed Gold Card, allowing investors to gain legal status in the U.S. for $5 million, and highlighted a $200 billion investment from SoftBank during his Joint Address to Congress.
Key points include:
- The accredited investor rule excludes many Americans from lucrative securities markets, requiring a net worth over $1 million or income exceeding $200,000.
- Public securities are accessible but burdened by regulatory requirements, prompting companies like Stripe and SpaceX to remain private.
- Approximately 80% of American households do not qualify as accredited investors, limiting their wealth-building opportunities.
- Private markets have expanded significantly, growing at double the rate of public equity markets.
- The SEC's accredited investor rule restricts access to promising investments, impacting millions of Americans.
- Advocates argue that financial resources are necessary for protection, contrary to the view that broader access to investments is beneficial.
- Sen. Tim Scott's Empowering Main Street in America Act proposes a test-in policy for the accredited investor definition.
- A test-in policy could enhance fairness and allow more Americans to participate in private markets.
- The SEC could amend the rule without new legislation, potentially reshaping private markets efficiently.