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SRFC Client Alert: SEC Proposes Additional Pathways for Individuals to Qualify as Accredited Investors

Overview

On September 30, 2026, the Securities and Exchange Commission (“SEC” or “Commission”) issued a series of releases (formally, notices and requests for comment) regarding potential additional pathways for natural persons to qualify as “accredited investors” under SEC rules, including an accredited investor exam that would be developed and administered by FINRA, and additional means of qualifying through certain professional designations.

The SEC would implement these new pathways by Commission order under the existing designation mechanism in Rule 501(a)(10) of Regulation D under the Securities Act of 1933, rather than by amending the text of the accredited investor definition. Such expansion would broaden the pool of individuals eligible to participate in private securities offerings (in particular, private offerings conducted in reliance on Regulation D).

The accredited investor notices are part of a broader Commission initiative to “expand responsible retailization of private markets,” which also includes two separate proposed rule amendments: one to modernize investment adviser performance-based compensation, and another to modernize the interval fund framework (including by permitting non-traded registered closed-end funds and business development companies to offer multiple share classes without individual exemptive relief).

The public comment periods for the various proposals will remain open for 60 days after the dates of publication in the Federal Register.

New Proposed Pathways for Individuals to Qualify as Accredited Investors

These proposals would build on the Commission’s August 2020 amendments to the accredited investor definition. The 2020 rulemaking added Securities Act Rule 501(a)(10), and a concurrent Commission order designated holders in good standing of the General Securities Representative (Series 7), Private Securities Offerings Representative (Series 82), and Investment Adviser Representative (Series 65) licenses as accredited investors. The Series 7 and Series 82 exams are developed and administered by FINRA. The Series 65 exam is developed by the North American Securities Administrators Association (NASAA) and administered by FINRA, and the Investment Adviser Representative is a state-registered designation rather than a FINRA license.

Notably, the accredited investor designation notices would not change the existing income and net worth tests in the accredited investor definition, nor would they themselves alter the separate “qualified purchaser” standard under the Investment Company Act of 1940 (relevant to Section 3(c)(7) private funds) or the “qualified client” standard under the Investment Advisers Act of 1940 (Rule 205-3, governing performance-based advisory fees). As a related matter, however, the companion performance-based compensation proposal issued the same day would (among other things) expand the “qualified client” definition to include accredited investors.

Accredited Investor Examination

The Commission is seeking comment on designating, by order under Rule 501(a)(10), passage of an accredited investor examination to be developed and administered by FINRA. The exam does not yet exist. FINRA has formulated only initial plans, and the description below reflects what FINRA currently anticipates. As contemplated, the exam would be modeled on FINRA’s existing Securities Industry Essentials (SIE) exam and would consist of approximately 75 multiple-choice questions (FINRA anticipates a range of 65 to 85), to be completed in approximately two hours. It would be designed to assess comprehension and sophistication in the areas of securities and investing, including whether the candidate has sufficient knowledge and experience in financial and business matters to evaluate the merits and risks of a prospective investment. The exam would be open to anyone age 18 or older, offered in person only (FINRA expects that 95% of U.S. test-takers would be within 60 miles of a test center), and delivered by a third-party vendor. The fee is anticipated to be similar to the current SIE exam fee of approximately $100. Accredited investor status obtained by passing the exam would remain valid for 10 years, after which an individual would need to retake and pass the exam to retain accredited investor status on that basis.

New Proposed Qualifying Professional Designations

The SEC is also seeking comment on designating, by order, holders in good standing of any of the following credentials as accredited investors:

  • A licensed U.S. Certified Public Accountant (CPA).
  • A Chartered Financial Analyst (CFA) charter holder.
  • A Certified Financial Planner® (CFP®) professional.
  • The following FINRA licenses (each independently qualifying):
    • Investment Banking Representative (Series 79).
    • Research Analyst (holding both the Series 86 and Series 87 licenses).

Potential Implications for Private Markets

If these proposals are adopted in their current form, several notable implications may arise for private markets:

Expanded Investor Pool and Capital Formation Benefits. The most immediate effect may be an increase in the number of natural persons eligible to participate in Regulation D offerings. However, the SEC acknowledges that many credential holders may already qualify as accredited investors under existing income or net worth criteria, making the net expansion difficult to quantify. Issuers (particularly small and emerging companies lacking institutional networks) may benefit from greater capital formation, lower costs of capital, and greater efficiency through access to a broader pool of accredited investors.

Verification Cost Reduction. The Commission notes that each of the proposed pathways would be independently verifiable (for the professional credentials, through public databases, and for the exam, through a verification process FINRA would develop). This may reduce issuers’ costs for confirming accredited investor status, particularly in Rule 506(c) offerings where reasonable steps to verify accredited investor status are required.[1]

Investor Protection Considerations. The SEC acknowledges that private offerings come with less disclosure and greater risks (illiquidity, agency costs, adverse selection) than registered offerings. The Commission’s position is that the knowledge, experience, and/or sophistication demonstrated by the designated credentials would increase the likelihood that those individual investors could evaluate the merits and risks of a prospective investment, even if some have fewer financial resources than those who qualify based on wealth.

Issuer, Fund Sponsor and Placement Agent Preparedness

Issuers, fund sponsors, and placement agents should consider reviewing their investor questionnaires and subscription documents now, so they are ready to update their documents to incorporate any new accredited investor categories, to the extent they are ultimately adopted.

Links to the Full SEC Notices

  • The accredited investor examination release can be found here.
  • The CPA release can be found here.
  • The CFA release can be found here.
  • The CFP release can be found here.
  • The FINRA licenses release can be found here.

If you have any questions regarding this client alert, please call or e-mail your SRFC attorney.

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DISCLAIMER: This communication, which we believe may be of interest to our clients and friends of the firm, is for general information only. It is not a full analysis of the matters presented and should not be relied upon as legal advice. This may be considered attorney advertising in some jurisdictions. Prior results do not guarantee a similar outcome.

[1]Separately, although not a binding SEC regulation, issuers may also bear in mind other recent efforts to reduce the verification burden (in particular, the SEC Division of Corporation Finance’s March 12, 2025 no-action letter to Latham & Watkins LLP and accompanying interpretations (Questions 256.35 and 256.36), which indicated that, in certain circumstances, high minimum investment amounts (at least $200,000 for natural persons and at least $1 million for legal entities), together with the purchaser’s written representations that it is an accredited investor and that its minimum investment is not financed in whole or in part by any third party for the specific purpose of making the investment, and the issuer’s lack of actual knowledge of contrary facts, may constitute reasonable steps to verify accredited investor status in Rule 506(c) offerings). Notably, the representations described in the no-action letter address natural persons qualifying under the net worth or income tests (Rule 501(a)(5) or (a)(6)), so issuers relying on credential-based status may instead verify through the relevant public database. In Rule 506(b) offerings, issuers need only a reasonable belief as to accredited investor status.