A debate raging in Washington DC over the definition of who qualifies to be an accredited investor could transform the way startups raise money
" which regulators use to determine who is allowed to buy unregistered securities, or securities that are not subject to normal disclosure requirements.
The origins of the definition of"accredited investor" trace back to the Great Depression and the Securities Act of 1933. The rule created an exemption allowing issuers to raise an unlimited amount of money without any of the normal disclosure requirements, provided that they only sell securities to accredited investors, which the SEC defined as anyone who has a net worth of at least $1 million or makes at least $200,000 a year.
"Private issues are a much more important aspect of the capital markets today than they were in 1982," Rep. J. French Hill of Arkansas, who sponsored the Fair Investment Opportunities for Professional Experts Act, which passed the house earlier this month, said. The bill would expand the definition of"accredited investor" to include people who don't meet the financial qualification but who have professional experience related to the investment in question.
"These private markets are dark, there's little information about them and, you know, bad things happen in the dark," Micah Hauptman, the director of investor protection at the Consumer Federation of America, said. He argued that without the investor protections of public markets, retail investors would be"sitting ducks" susceptible to scams and deceptive business practices.
United States Latest News, United States Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
11 high-paying jobs that don't require a college degreeInsider tells the global tech, finance, markets, media, healthcare, and strategy stories you want to know.
Read more »
Tech workers willing to give up high salaries amid mass layoffsInsider tells the global tech, finance, markets, media, healthcare, and strategy stories you want to know.
Read more »
Families of dead Wagner mercenaries paid $60,000, creating cash chaosFamilies of Wagner mercenaries killed fighting for Putin are given $60,000 compensation – and the number of payouts may be affecting Russia's economy
Read more »
Modi’s welcome in Washington wows and worries Indians back homePrime Minister Narendra Modi's high-profile visit burnishes his image ahead of elections next year. Political experts say the portraits of Modi in Washington and the surrounding events will undoubtedly play a large role in the upcoming election.
Read more »
Bits & Pretzels: 5 health tech takeaways from investorsInsider tells the global tech, finance, markets, media, healthcare, and strategy stories you want to know.
Read more »