Head-to-head: should the SEC approve an accredited investor exam?

Author: | Published: 5 Mar 2018

Q: Should the SEC approve an accredited investor exam?


Steve Mickelsen, General Counsel, 3Degrees Group

The mission of the US Securities and Exchange Commission (SEC) is to 'protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation'.

To enable its goal of protecting investors and facilitating capital formation, it has adopted different structures for investors to invest in public companies versus private companies. Public company shares are traded on a public market, such as Nasdaq and public companies are required to make regular public disclosures of business and financial information. Private company shares are traded over-the-counter, typically have more limited disclosures, and the ability of owners of private company stock to resell their stock is severely restricted by SEC rules.

The SEC's regulation D rules restrict most private company stock sales to accredited investors. Presently, to be an accredited investor, a natural person must have earned income...