Federal

Fair Investment Opportunities for Professional Experts Act

Source: Congress.gov · 830 words in original text

What This Bill Does

This bill changes the rules for who qualifies as an "accredited investor" under federal securities laws. An accredited investor is someone allowed to invest in certain types of securities with fewer protections. The bill creates specific, written-out standards for who counts as an accredited investor.

Who It Affects

The Securities and Exchange Commission (the federal agency that regulates stock and investment markets), people who want to invest in securities, brokers and investment advisers, the Financial Industry Regulatory Authority (a self-regulatory organization for securities professionals), and state securities divisions.

Key Provisions

- A person qualifies as an accredited investor if their individual net worth or combined net worth with a spouse or spousal equivalent exceeds $1,000,000. The value of a primary residence does not count toward this amount, and certain debts tied to a primary residence do not count either. (Sec. 2(a)) - A person qualifies if they earned individual income over $200,000 in each of the last two years, or combined income with a spouse or spousal equivalent over $300,000 in each of those years, and reasonably expect to reach that same income level in the current year. (Sec. 2(a)) - A person currently licensed or registered as a broker or investment adviser by the Securities and Exchange Commission, the Financial Industry Regulatory Authority, a state securities division, or an equivalent organization qualifies as an accredited investor. (Sec. 2(a)) - The Securities and Exchange Commission must update its investment rules to match the new accredited investor standards created by this bill. (Sec. 2(b)) - The dollar amounts for net worth and income qualifications shall be adjusted for inflation every 5 years to the nearest $10,000 based on the Consumer Price Index for All Urban Consumers. (Sec. 2(a))

What Changes

If this bill becomes law, the written rules for who qualifies as an accredited investor will be placed directly into the Securities Act of 1933 instead of being defined solely through regulations. This codifies (officially writes into law) five specific ways someone can qualify. The government must then update its detailed investment regulations (Regulation D) to match these new legal standards.

Important Definitions

Accredited investor: A person who meets certain financial standards and is allowed to invest in certain securities with fewer legal protections. Spousal equivalent: Not defined in the bill text. Primary residence: Not defined in the bill text. Net worth: Not defined in the bill text.

IIB 118TH CONGRESS 1ST SESSION H. R. 835 IN THE SENATE OF THE UNITED STATES JUNE 6, 2023 Received; read twice and referred to the Committee on Banking, Housing, and Urban Affairs AN ACT To amend the Securities Act of 1933 to codify certain quali- fications of individuals as accredited investors for pur- poses of the securities laws. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 VerDate Sep 11 2014 00:50 Jun 07, 2023 Jkt 039200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H835.RFS H835 kjohnson on DSK79L0C42PROD with BILLS 2 HR 835 RFS SECTION 1. SHORT TITLE. 1 This Act may be cited as the ‘‘Fair Investment Op- 2 portunities for Professional Experts Act’’. 3 SEC. 2. DEFINITION OF ACCREDITED INVESTOR. 4 (a) IN GENERAL.—Section 2(a)(15) of the Securities 5 Act of 1933 (15 U.S.C. 77b(a)(15)) is amended— 6 (1) by redesignating subparagraphs (i) and (ii) 7 as subparagraphs (A) and (F), respectively; and 8 (2) in subparagraph (A) (as so redesignated), 9 by striking ‘‘; or’’ and inserting a semicolon, and in- 10 serting after such subparagraph the following: 11 ‘‘(B) any natural person whose individual 12 net worth, or joint net worth with that person’s 13 spouse or spousal equivalent, exceeds 14 $1,000,000 (which amount, along with the 15 amounts set forth in subparagraph (C), shall be 16 adjusted for inflation by the Commission every 17 5 years to the nearest $10,000 to reflect the 18 change in the Consumer Price Index for All 19 Urban Consumers published by the Bureau of 20 Labor Statistics) where, for purposes of calcu- 21 lating net worth under this subparagraph— 22 ‘‘(i) the person’s primary residence 23 shall not be included as an asset; 24 ‘‘(ii) indebtedness that is secured by 25 the person’s primary residence, up to the 26 VerDate Sep 11 2014 00:50 Jun 07, 2023 Jkt 039200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H835.RFS H835 kjohnson on DSK79L0C42PROD with BILLS 3 HR 835 RFS estimated fair market value of the primary 1 residence at the time of the sale of securi- 2 ties, shall not be included as a liability (ex- 3 cept that if the amount of such indebted- 4 ness outstanding at the time of sale of se- 5 curities exceeds the amount outstanding 60 6 days before such time, other than as a re- 7 sult of the acquisition of the primary resi- 8 dence, the amount of such excess shall be 9 included as a liability); and 10 ‘‘(iii) indebtedness that is secured by 11 the person’s primary residence in excess of 12 the estimated fair market value of the pri- 13 mary residence at the time of the sale of 14 securities shall be included as a liability; 15 ‘‘(C) any natural person who had an indi- 16 vidual income in excess of $200,000 in each of 17 the 2 most recent years or joint income with 18 that person’s spouse or spousal equivalent in 19 excess of $300,000 in each of those years and 20 has a reasonable expectation of reaching the 21 same income level in the current year; 22 ‘‘(D) any natural person who is currently 23 licensed or registered as a broker or investment 24 adviser by the Commission, the Financial In- 25 VerDate Sep 11 2014 00:50 Jun 07, 2023 Jkt 039200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H835.RFS H835 kjohnson on DSK79L0C42PROD with BILLS 4 HR 835 RFS dustry Regulatory Authority, or an equivalent 1 self-regulatory organization (as defined in sec- 2 tion 3(a)(26) of the Securities Exchange Act of 3 1934), or the securities division of a State, the 4 District of Columbia, or a territory of the 5 United States or the equivalent division respon- 6 sible for licensing or registration of individuals 7 in connection with securities activities; 8 ‘‘(E) any natural person the Commission 9 determines, by regulation, to have demonstrable 10 education or job experience to qualify such per- 11 son as having professional knowledge of a sub- 12 ject related to a particular investment, and 13 whose education or job experience is verified by 14 the Financial Industry Regulatory Authority or 15 an equivalent self-regulatory organization (as 16 defined in section 3(a)(26) of the Securities Ex- 17 change Act of 1934); or’’. 18 (b) RULEMAKING.—The Commission shall revise the 19 definition of accredited investor under Regulation D (17 20 VerDate Sep 11 2014 00:50 Jun 07, 2023 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H835.RFS H835 kjohnson on DSK79L0C42PROD with BILLS 5 HR 835 RFS CFR 230.501 et seq.) to conform with the amendments 1 made by subsection (a). 2 Passed the House of Representatives June 5, 2023. Attest: CHERYL L. JOHNSON, Clerk. VerDate Sep 11 2014 00:50 Jun 07, 2023 Jkt 039200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H835.RFS H835 kjohnson on DSK79L0C42PROD with BILLS

Important: This plain English summary was generated by AI and is provided for informational purposes only. It is not legal advice. Always consult the official bill text on Congress.gov or a qualified attorney for legal matters.