Changing The Definition Of Accredited Investor

The U.S. House of Representatives has started to debate whether the definition of an "accredited investor" should be expanded to become less restrictive.

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The SEC plans to issue an update to the financial thresholds for the accredited investor definition in April 2023.

The current SEC definition states that an accredited investor must have a net worth that exceeds $1 million (excluding primary residence) or an annual income over $200,000.

The argument is that the definition unfairly limits access to investment opportunities for those without significant wealth.

Many believe that having significant net worth or income does not make you more or less qualified to invest in certain types of investments, but those who look to maintain or raise the threshold of accredited investor status think that by upholding these standards they are protecting investors who may not have enough net worth or cash to absorb losses.