WASHINGTON, DC – Today, Congressman David Schweikert (AZ-06) and Congressman French Hill (AR-02) introduced H.R. 4762, the Fair Investment Opportunities for Professional Experts Act. Specifically, this bill expands the definition of an accredited investor, allowing Americans who have relevant education, professional expertise, or other similar credentials to invest in private offerings.
“Simply put, this legislation would rightfully expand the definition of ‘accredited investor’ to include professional experts, allowing the opportunity for more Americans to invest in ideas early on based on their knowledge and suitability rather than their wealth,” said Congressman Schweikert. “The current financial parameters on investors we have are based solely on wealth, excluding individuals who have the experiences necessary to be provided access to suitable investments. I thank my colleague, Representative French Hill, for his continued support and I hope this common-sense legislation can swiftly pass the House.”
“Small businesses and emerging startups in my home state of Arkansas play a significant role as drivers of our nation’s economic activity, innovation, and job creation,” said Congressman Hill. “Their capacity to raise capital in the private markets is critical to the economic well-being of the United States. Therefore, the ability to participate in a private offering should not be limited to individuals that can pass an arbitrary wealth test set by the government and, instead, should be afforded to individuals that demonstrate a strong understanding of the offering. This will provide both greater investment opportunities for more Americans and will enable entrepreneurs to create more jobs.”
Because of significant costs and barriers to raising capital in the U.S. public markets, most small companies raise start-up or expansion funds in the private market where they can sell securities to “accredited investors” only. The current definition focuses on the financial status of the investor, and as a result, only wealthy individuals can participate in private offerings, barring the majority of Americans from what may be attractive investment opportunities.
The Fair Investment Opportunities for Professional Experts Act expands the definition of an accredited investor to allow access to private offerings for individuals who have demonstrated an understanding of the subject matter related to the offering. This will provide additional investment opportunities for more Americans and will enhance the ability of small businesses to raise capital and grow.
In the 115th Congress, the House Financial Services Committee passed a previous version of this legislation, H.R. 1585, by an overwhelming bipartisan vote of 58-2, and by a voice vote in the full House; it did not receive consideration in the Senate.