SEC-accredited investor rule changes: What it means for you in 2027

The Securities and Exchange Commission (SEC)’s accredited investor rule changes have opened private-market investing to far more people than before, including anyone who passes certain Financial Industry Regulatory Authority (FINRA) exams, not just high-net-worth individuals. In 2020, the SEC amended the definition of an accredited investor, expanding the pool of investors eligible to participate in private securities offerings. These regulatory changes broadly affect how companies verify accredited investors and raise capital in the private markets.

In fact, the number of accredited investors has soared in the last five years, largely because the financial thresholds are not tied to inflation. As wealth and income grow over time and barriers to registration decrease, more people and private entities have gained accredited investor status.

Previously, investing in early-stage startups and high-growth companies before their IPOs was largely limited to high-net-worth individuals and institutional investors who could satisfy accredited investor standards. The rule change not only redefined who qualifies but also influenced how issuers verify that status in private sales of unregistered securities. Since these investments often carry greater risk, offer limited transparency, and are subject to minimal SEC oversight, proper verification remains critical for both issuers and investors seeking higher returns.

What is the SEC registration process, and where did it come from?

Most securities sold to investors in regulated financial markets are subject to a rigorous registration process facilitated by the SEC. Securities issuers, the companies raising capital, must provide extensive disclosures covering their business operations, management team, and any risks associated with the investment. This information is necessary to legally register securities with the SEC, ensuring transparency for all market participants.

The rationale for the SEC’s registration requirements dates back to before the Securities Act of 1933. In the early 1900s, there were minimal regulations governing the sale of securities, and investors faced considerable risks. Companies could offer shares without providing accurate or complete disclosures about business performance or investment risks, leading to frequent fraud and stock manipulation, such as the Erie War schemes.

With the advent of the Securities Act of 1933, registered securities transactions began offering investors critical protections. Most disclosure obligations are fulfilled through prospectuses, i.e., legal documents that summarize key facts and risks for new securities being sold. This registration process helps ensure market integrity. If issuers make false statements or intentional omissions, they face substantial SEC-enforced penalties and fines, holding both organizations and executives accountable for investor protection.

How much does registration cost?

Although registering securities has proven effective at reducing investment fraud, there’s a considerable cost associated with the process. The issuer must incur significant legal and compliance-related expenses, primarily for attorneys, accountants, and compliance officers. If the information disclosed is inaccurate or incomplete, it can result in large monetary losses and liabilities for the issuer. Issuers can also be required to pay registration fees to the SEC that reach into the six figures.

What is Regulation D?

Given the high cost of registration, the SEC provides exemptions that allow certain issuers to avoid the traditional registration process, most notably Regulation D, a rule highly relevant to both accredited investor verification and Series 82 professionals. Regulation D, known as the private placement exemption, permits the sale of unregistered securities primarily to select private investors. This set of rules governs how unregistered securities offerings are marketed to specific investors, including:

• Unlimited sales to accredited investors following proper verification procedures
• Sales to no more than 35 non-accredited investors in any given offering

Traditionally, accredited investors were defined as affluent individuals or institutions with substantial financial experience and resources. The condensed list below highlights some of the most common qualifying accredited investors before the rule updates:

• Individuals with a net worth exceeding $1 million (excluding primary residence)
• Individuals earning $200,000 or more annually for the past two years
• Married couples with a joint annual income of $300,000 or more for the past two years
• Officers, directors, or partners of the issuer
• Corporations, partnerships, or charitable organizations possessing assets over $5 million
• Banks, insurance companies, and registered investment companies

When using Regulation D, issuers focus on raising capital by engaging verified accredited investors. This approach allows unlimited issuance of unregistered securities to qualified individuals and institutions considered “sophisticated,” with the financial expertise to understand and evaluate investment risk. While up to 35 non-accredited investors may participate in these offerings, issuers must adhere to heightened disclosure and suitability rules to ensure compliance. Because of these additional requirements for non-accredited investors, most Regulation D transactions overwhelmingly involve accredited parties who meet strict verification standards.

The “new” accredited investor

The 2020 change to the accredited investor definition significantly expanded the group that qualifies. As of late October 2020, these additional parties now qualify as accredited investors:

• Investors who hold the Series 7 license, Series 65, or Series 82 in good standing
• “Knowledgeable” employees of private fund companies
• Limited liability companies (LLCs) with $5 million in total assets
• Indian tribes possessing assets greater than $5 million
• Foreign governments, funds, and legal entities with assets exceeding $5 million
• Family offices managing at least $5 million in assets
• Spouses of accredited investors

Historically, entities and organizations holding over $5 million in assets generally qualified as accredited investors. The updated SEC rule further clarifies that new entity types, such as LLCs, Indian tribes, family offices, and foreign government funds, are also included in the expanded definition.

At the individual level, there are now more distinct paths to accredited investor status. Passing recognized financial industry exams, such as the Series 7, Series 65, or Series 82, is a pivotal addition to these pathways. The Series 7 and Series 82 usually require employment with a sponsoring financial services firm, while the Series 65 may be obtained independently without an employer sponsor. These are rigorous exams designed to validate a high level of investment knowledge and competence. The SEC recognizes that those who pass them demonstrate the financial acumen needed to make informed decisions about private investment opportunities. Additional avenues include qualifying as a knowledgeable employee of a fund or as the spouse of an accredited investor.

By broadening the definition through mechanisms such as the Series 7, Series 65, and Series 82, as well as other pathways, the SEC aims to better reflect the diverse qualifications in today’s investment landscape.

What new accredited investor pathways has the SEC proposed?

In late September 2026, the SEC announced notices inviting public feedback on six proposed methods for investors to qualify as accredited. These proposals aim to let the SEC recognize specific professional certifications or new credentials as valid routes to accredited investor status.

The proposals would permit U.S. CPAs, CFA® charterholders, CFP® certificants, FINRA Series 79 licensees, and FINRA Series 86 and 87 research analysts to qualify as accredited investors. The SEC has also floated a new exam, administered by FINRA, that would confer accredited investor status. This exam would be similar to the Securities Industry Essentials (SIE) exam, which entry-level securities professionals use to secure employment and additional licenses.

Importantly, these pathways are proposals out for public comment, not final rules. Investors should watch for official agency updates for the latest information and the timeline for any approval.

The result

The SEC’s rule change broadens the field of accredited investors that an issuer may pursue when selling unregistered securities. Issuers can raise more capital without the formal registration process, which affects the number of public offerings that require registration. Individuals and organizations now have several new ways to qualify as accredited investors, which should lead to greater participation in the private securities market.

The consequences of the rule change will be studied and analyzed over the next several years, but it certainly benefits issuers that prefer to raise capital without registration requirements. Those aiming to achieve Series 7, Series 65, or Series 82 licensure now have a direct path to becoming accredited investors. With recent pushes in Congress to further expand the definition of an accredited investor, the pool of investors may continue to grow in the near future.