It looks like the Securities and Exchange Commission (the “SEC”) is ready to expand the universe of “accredited investors”. As per a series of notices issued on September 30, 2026, the SEC is seeking public comment on whether to add as “accredited investors”, as defined in Rule 501(a) of Regulation D (“Reg D”) under the Securities Act of 1933 (the “Securities Act”), natural persons who hold, in good standing, either: (1) a license as a U.S. Certified Public Accountant (CPA); (2) a charter as a Chartered Financial Analyst (CFA); (3) a certification as a Certified Financial Planner (CFP); (4) the Financial Industry Regulatory Authority (“FINRA”) Investment Banking Representative license (Series 79); or (5) the FINRA Research Analyst License (Series 86 and Series 87).[1] In addition, the SEC is seeking public comment on whether natural persons who pass a new test to-be-created by FINRA should also qualify for “accredited investor” status.[2]

The public comment period will remain open for 60 days after the date of publication of the notices in the Federal Register. If the SEC determines to expand the accredited investor definition substantially as described in the notices, it would represent the most significant change to the accredited investor definition since 2020. The impact of that change, however, is hard to calculate for a number of reasons, including that (A) many of the persons who may qualify as accredited investors via the new credentials may already qualify as accredited investors under one of the existing criteria, (B) the amount of capital that may be available for investment from natural persons who do not otherwise qualify as accredited investors through the income or net worth tests may be limited, and (C) some issuers may prefer to utilize investment thresholds that the newly-accredited investors cannot easily satisfy.

Nonetheless, it is likely that the potential changes would be welcomed by natural persons who wish to have the opportunity to invest in private offerings that are not available to the general public and by smaller issuers who seek greater flexibility when conducting private offerings, particularly at early stages of development.

Accredited Investor Background

Qualification as an accredited investor is of critical importance in an individual’s ability to participate in private placements conducted under Rules 506(b) and 506(c) of Reg D.[3] Moreover, certain other offering exemptions, such as Regulation A and Regulation Crowdfunding, limit the amount that non-accredited investors may invest.

The definition of accredited investor is contained in Rule 501(a) of Reg D. Natural persons can qualify as accredited investors if they:

• Had an income in excess of $200,000 in each of the two most recent years, or joint income with their spouse or spousal equivalent in excess of $300,000 in each of those years, and have a reasonable expectation of reaching the same income level in the current year;
• Have a net worth exceeding $1.0 million (excluding the value of their primary residence and any indebtedness secured by such residence up to the estimated value of the residence), either alone or with their spouse or spousal equivalent;
• Are a director, executive officer or general partner of the issuer or of a general partner of the issuer;
• Are “knowledgeable employees”, as defined under the Investment Company Act of 1940, of the private-fund issuer of the securities being offered or sold; or
• Are “family clients” of a “family office”, each as defined under the Investment Advisers Act of 1940, that have their investment in the issuer directed by such family office.

In addition, Rule 501(a)(10) confers accredited investor status on natural persons who hold in good standing one or more professional certifications or designations or credentials from an accredited educational institution that the SEC has designated as qualifying an individual for accredited investor status. As per Rule 501(a)(10), the SEC will consider the following non-exclusive list of attributes in determining whether to designate a professional certification or designation or credential as qualifying for accredited investor status:

• The certification, designation or credential arises out of an examination or series of examinations administered by a self-regulatory organization or other industry body or is issued by an accredited educational institution;
• The examination or series of examinations is designed to reliably and validly demonstrate an individual’s comprehension and sophistication in the areas of securities and investing;
• Persons obtaining such certification, designation or credential can reasonably be expected to have sufficient knowledge and experience in financial and business matters to evaluate the merits and risks of a prospective investment; and
• An indication that the individual holds the certification or designation is either made publicly availably or is otherwise independently verifiable.

At the time of the adoption of Rule 501(a)(10) in August 2020, the SEC designated the General Securities Representative license (Series 7), the Private Securities Offerings Representative license (Series 82) and the Investment Adviser Representative license (Series 65) as qualifying a holder of such licenses in good standing for accredited investor status.

New Routes to Accredited Investor Status

Citing a lack of evidence to suggest that the inclusion of holders of Series 7, 65 and 82 licenses has created investor protection concerns, and noting the receipt of recommendations to further expand the number of investors that qualify as accredited investors under Rule 501(a)(10) since its adoption, the SEC is seeking comment as to whether natural persons who hold, in good standing, either a CPA license, a CFA charter, a CFP certification, a FINRA Series 79 license or a FINRA Series 86 & Series 87 license, should qualify as accredited investors.

Throughout the public comment notices that it issued regarding the various new credentials, the possession of which could allow a natural person to qualify as an accredited investor, the SEC analyzes such credentials (and the process for obtaining and maintaining such credentials) through the four non-exclusive Rule 501(a)(10) factors described above, and ultimately expresses its belief that it would be appropriate to designate holding such credentials in good standing as qualifying an individual for accredited investor status pursuant to Rule 501(a)(10).

With respect to the creation of a new exam to determine whether a person qualifies as an accredited investor, the SEC noted that, based on its discussions with FINRA, the exam would be administered by FINRA and would be largely modeled on the existing Securities Industry Essentials Exam.[4] The exam would be open to anyone age 18 years or older, would be designed to assess a candidate’s knowledge, comprehension and skills covering essential securities and investment topics (including structures of securities, investment risks, financial statements and conflicts of interest), would consist of approximately 75 multiple-choice questions over a period of approximately two hours, and would have a passing score that “would be set to reflect the minimum level of knowledge necessary for candidates to reliably and validly demonstrate their comprehension and sophistication in the areas of securities and investing such that the candidate will reasonably be expected to have sufficient knowledge and experience in financial and business matters to evaluate the merits and risks of a prospective investment.”[5]

Any person who fails to pass the exam three or more times within a two-year period would be prohibited from again taking the exam until a period of 180 calendar days has elapsed from the date of such person’s last attempt to pass the exam. FINRA would develop a process where the public could independently verify the status of those who pass the exam, and it is anticipated that the results of the exam would remain valid for ten years.

Based upon its understanding of the contents and administration of the proposed exam, the SEC would include persons who pass it within the definition of accredited investor.

Conclusion

As noted above, the notices that were issued by the SEC remain subject to a public comment period of 60 days following their publication in the Federal Register. Thereafter, the SEC will determine whether to expand the pathways to accredited investor status as described in the notices, to do so in some other way, or not to do so at all. We will monitor this process as it unfolds. If you have any questions about how to qualify as an “accredited investor” or about private offerings of securities, please reach out to the authors of this Legal Update, or to the other Pryor Cashman professionals with whom you work.