The Accredited Investor Definition Act would change certain criteria the federal Securities and Exchange Commission uses to determine who is eligible to become an accredited investor.
Currently, the SEC relies on an individual's wealth and incometo make the designation. To become accredited, individuals need a net worth over $1 million, not including the value of their primary residence, or an income over $200,000.
By changing those requirements, more individuals would be able to become accredited and have the option to buy unregistered securities, which often carry higher risks.
Republican Rep. Bill Huizenga, said Monday, that people shouldn’t have to be millionaires to be accredited and thathis billwould expand investment opportunities for knowledgeable investors.
“The ability to participate in a private offering should not be limited to individuals that pass some sort of federal government assets test. Instead, participation should be expanded to include all individuals and that can demonstrate they have sufficient understanding of the offering,” he said.
Huizenga said the change would help more investors support small businesses in places like Kalamazoo, Benton Harbor, St. Joe, as well as small businesses across the nation.
The bill now heads to the U.S. Senate.