(Article from Registered Funds Regulatory Update, July 2025)
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The U.S. House of Representatives Financial Services Committee recently approved a number of bills, many of which reduce capital markets and banking regulations and could scale back the SEC’s oversight of capital markets. U.S. Representative and Committee Chairman French Hill (R-AR) stated “[the] Committee has been hard at work examining solutions to improve the quality and condition of financial regulation to empower access to capital for American businesses—large and small. These bills strengthen community banking in America, relieve small businesses from the strain of harmful overregulation, expand access to capital, and more.”
Several bills propose to increase retail access to private markets by removing investment limitations or expanding the scope of the definition of “accredited investors” to include individuals that qualify based on education, professional experience, or other certifications, designations, and credentials, rather than primarily focusing on financial status as the SEC’s current definition does, as well as expand access to capital. For example, the following bills were approved:
- The Increasing Investor Opportunities Act proposes to remove the SEC’s 15% limit on closed-end funds’, including business development companies’, investments in private securities to increase retail access into the private markets. Introduced by U.S. Representative Ann Wagner (R-MO) with four co-sponsors, three of which are Democrats, the Committee passed the bill by a vote of 41 to 10.
- The Equal Opportunity for All Investors Act of 2025 proposes to allow individuals to qualify as “accredited investors” if they pass an SEC-administered exam demonstrating “financial sophistication” by assessing competency with respect to different types of securities, disclosure requirements under the securities laws, corporate governance, financial statements, conflicts of interest, and aspects of unregistered securities, including risks, among others, related to liquidity, disclosure, valuation, leverage, and concentration. Introduced by U.S. Representative Mike Flood (R-NE) with four co-sponsors, three of which are Democrats, the Committee passed the bill by a vote of 49 to 2.
- The Accredited Investor Definition Review Act mandates the SEC to review and potentially expand the list of certifications, designations, and credentials that would qualify individuals as “accredited investors.” The bill mandates that the SEC recognize certain existing licenses and grants the SEC authority to add similar credentials over time. The SEC may also add new certifications that are similar in terms of measuring financial sophistication and adjust the existing list based on what it deems necessary for investor protection. Introduced by U.S. Representative Bill Huizenga (R-MI), the Committee passed the bill by a vote of 34 to 16.
- The Fair Investment Opportunities for Professional Experts Act seeks to expand the definition of “accredited investors” to include individuals with “education, professional experience, or other similar credentials” who can demonstrate the requisite knowledge to make informed investment decisions regardless of their income or net worth. Such individuals would include persons who are currently licensed or registered as brokers or investment advisers with good standing with the SEC, an SRO, or a state securities division. It would also include persons that the SEC determines, by regulation, to have demonstrable education or work experience to qualify as having professional knowledge of a subject related to a particular investment, and whose education or work experience is verified by an SRO. Introduced by Hill with three co-sponsors, one of which is a Democrat, the Committee passed the bill by a vote of 45 to 1. On June 23, 2025, the House passed the bill by a bipartisan vote of 397-12, which has now been referred to the Senate Banking, Housing, and Urban Affairs Committee.
- The Access to Small Business Investor Capital Act proposes to exempt funds that invest in BDCs from including the “acquired fund fees and expenses” calculation in the prospectus fee table, providing more accurate information for investors. Introduced by U.S. Representative Brad Sherman (D-CA) with twenty-four co-sponsors, sixteen of which are Democrats, the Committee passed the bill by voice vote. On June 23, 2025, the House unanimously passed the bill, which has now been referred to the Senate Banking, Housing, and Urban Affairs Committee.
Press Release, Financial Services Committee Advances 25 Bills to Strengthen Community Banking, Scale Back Overregulation, and Expand Access to Capital (May 21, 2025), available at: https://financialservices.house.gov/news/documentsingle.aspx?DocumentID=409738.
Press Release, Ten Financial Services Committee Bills Pass the House (June 23, 2025), available at: https://financialservices.house.gov/news/documentsingle.aspx?DocumentID=410775.