SEC proposal: expanded accredited investor eligibility for natural persons

Rule 501(a)(10) of  Regulation D allows a natural person to qualify as an accredited investor if they hold, in good standing, certain professional certifications, designations, or credentials designated by the SEC pursuant to an SEC order.  The Proposal requests comment on whether to issue orders recognizing the following credentials as qualifying natural persons for accredited investor status:  passage of a newly-proposed FINRA-developed accredited investor examination, or the holding of U.S. CPA licenses, CFA charters, U.S. CFP certifications, or FINRA Series 79, 86, and 87 licenses.²  The new credentials would supplement—not replace—the existing income, net worth, and other accredited investor provisions.  

The Proposal reflects the SEC’s view that professional education, examination, and experience can demonstrate financial sophistication as long as a credential is held in good standing and is independently verifiable. A credential would qualify only the individual who holds the credential and would not permit that individual to purchase securities on behalf of anyone else. 

The Proposal is part of a group of SEC “retailization” proposals—all released on September 30—aimed at increasing the access of retail investors to a larger scope of investment products, including private investments. Another of these proposals would allow registered investment advisers to charge performance fees to accredited investors.

Background

Regulation D provides a critical set of exemptions from the Securities Act requirement to register with the SEC an offer and sale of securities.  According to the SEC, the definition of  “accredited investor” is a cornerstone of Regulation D as it allows investors who qualify as accredited investors to participate in investment opportunities that are generally not available to non-accredited investors, including investments in private company and private fund investments. 

Natural persons may qualify as accredited investors if they come within any of a number of categories listed in Rule 501(a), including any credentials designated by the SEC pursuant to Rule 501(a)(10). When determining whether to designate a professional credential as qualifying an investor for accredited investor status under Rule 501(a)(10), the SEC considers a non-exclusive list of attributes on whether a credential: 

• arises from an examination administered by a self-regulatory organization or other industry body, or is instead issued by an accredited educational institution
• reliably demonstrates securities and investing comprehension
• supports sufficient financial and business knowledge to evaluate investment merits and risks
• can be publicly or independently verified

In 2020, the SEC designated three credentials under Rule 501(a)(10): Series 7 General Securities Representative license, Series 65 Licensed Investment Adviser Representative, and Series 82 Private Securities Offerings Representative license.  The SEC has made no additional designations under Rule 501(a)(10) since then.

Proposed new Rule 501(a)(10) credentials

The SEC is now proposing to add individuals who hold any of the following credentials to the definition of accredited investors under Rule 501(a)(10):

• a U.S. CPA license issued by one of 55 U.S. jurisdictions
• a CFA charter
• a U.S. CFP certification
• a Series 79 Investment Banking Representative license
• a Series 86 Research Analyst license
• a Series 87 Research Analyst license

In addition to the new designations listed above, the Commission is proposing that individuals who pass a new FINRA-developed accredited investor exam would qualify as an accredited investor. The proposed exam is intended to assess the exam taker’s financial sophistication and comprehension of various aspects of investing.

The proposed exam would be open to anyone aged 18 or older and would not require FINRA-firm sponsorship or industry affiliation. It would be modeled on the Securities Industry Essentials Exam (“SIE”), delivered in English at third-party test centers, and is contemplated to include about 75 multiple-choice questions (within a 65–85-question range), a two-hour testing period, a fee similar to the current USD100 SIE fee, and a 120-day scheduling window. FINRA would set the passing standard and update the exam as markets, private-offering practices, and applicable laws change.

A passing result would be valid for ten years, after which the investor would need to retake the exam. A candidate who fails would have to wait 30 days to retake the exam, with a longer waiting period after repeated failures. Passing would not authorize securities-industry registration.

Key takeaways

The impact of the increase in the number of natural person that qualify as accredited investors as a result of the Proposal is uncertain: many of the new credential holders may already qualify as accredited investors, some may not participate in offerings or invest in investments that require accredited investor status, and some issuers may continue to favor institutions or limit natural person participation by imposing investment minimums or other requirements.

If adopted, the Proposal could meaningfully broaden access to private company, private fund, and other exempt offerings to natural person investors and could improve the Regulation D offering process by allowing issuers to easily verify credentials rather than reviewing income or net worth records. These changes should, in theory, lower the offering costs associated with these issuances. 

Comment process

Comments are due on or before December 4, 2026. Until a final rule becomes effective, the only designations under Rule 501(a)(10) remain those made by the SEC in 2020. 

Footnotes

1. SEC Release Nos. 33-11445 (FINRA accredited investor exam) (File No. 4-931), 33-11446 (CPA license) (File No. 4-932), 33-11447 (CFA charter) (File No. 4-933), 33-11448 (CFP certification) (File No. 4-934), and 33-11449 (Series 79 and Series 86/87 licenses) (File No. 4-935), each dated September 30, 2026. 

2. The term “CPA” means certified public accountant; the term “CFA” means chartered financial analyst; the term “CFP” means certified financial planner; the term “FINRA” means Financial Industry Regulatory Authority, Inc.