Notice2026-20307
Potential Designations of the Investment Banking Representative License (Series 79) and the Research Analyst License (Series 86 and Series 87) as Qualifying Natural Persons for Accredited Investor Status
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
October 5, 2026
Issuing agencies
Securities and Exchange Commission
Abstract
Notice is given that the Securities and Exchange Commission (the "Commission") is considering whether to issue an order designating the Investment Banking Representative license (Series 79) and the Research Analyst license (Series 86 and Series 87) as each independently qualifying natural persons for accredited investor status.
Full Text
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<title>Federal Register, Volume 91 Issue 191 (Monday, October 5, 2026)</title>
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[Federal Register Volume 91, Number 191 (Monday, October 5, 2026)]
[Notices]
[Pages 63357-63365]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-20307]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 33-11449; File No. 4-935]
Potential Designations of the Investment Banking Representative
License (Series 79) and the Research Analyst License (Series 86 and
Series 87) as Qualifying Natural Persons for Accredited Investor Status
AGENCY: Securities and Exchange Commission.
ACTION: Notice; request for comment.
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SUMMARY: Notice is given that the Securities and Exchange Commission
(the ``Commission'') is considering whether to issue an order
designating the Investment Banking Representative license (Series 79)
and the Research Analyst license (Series 86 and Series 87) as each
independently qualifying natural persons for accredited investor
status.
DATES: This release was published in the Federal Register on October 5,
2026. Comments should be received on or before December 4, 2026.
ADDRESSES: Comments may be submitted by any of the following methods:
Electronic Comments
<bullet> Use the Commission's internet comment form (<a href="https://www.sec.gov/comments/4-935/potential-designations-investment-banking-representative-license-series-79-research-analyst-license">https://www.sec.gov/comments/4-935/potential-designations-investment-banking-representative-license-series-79-research-analyst-license</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#d8aaadb4bdf5bbb7b5b5bdb6acab98abbdbbf6bfb7ae"><span class="__cf_email__" data-cfemail="3042455c551d535f5d5d555e4443704355531e575f46">[email protected]</span></a>. Please include
File Number 4-935 on the subject line. To submit a comment to more than
one file, please include each file number on the subject line.
[[Page 63358]]
Paper Comments
<bullet> Send paper comments to Vanessa A. Countryman, Secretary,
Securities and Exchange Commission, 100 F Street NE, Washington, DC
20549-1090.
All submissions should refer to File Number 4-935. To submit a comment
to more than one file, please refer to each file number. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method of submission. The Commission will post all
submitted comments on its website (<a href="https://www.sec.gov/rules-regulations/public-comments/4-935">https://www.sec.gov/rules-regulations/public-comments/4-935</a>). Do not include personally
identifiable information in submissions; you should submit only
information that you wish to make available publicly. The Commission
may redact in part or withhold entirely from publication submitted
material that is obscene or subject to copyright protection.
FOR FURTHER INFORMATION CONTACT: John Byrne, Office Chief, Kenisha D.
Nicholson, Senior Special Counsel, or Max Corey, Special Counsel,
Office of Small Business Policy, Division of Corporation Finance, at
202-551-3460, Securities and Exchange Commission, 100 F Street NE,
Washington, DC 20549.
SUPPLEMENTARY INFORMATION:
I. Background
A. Accredited Investor Definition
Regulation D \1\ provides a widely-used set of exemptions from
registration under 15 U.S.C. 77a et seq. (the ``Securities Act'') for
the offer and sale of securities.\2\ Among other things, Regulation D
includes the regulatory definition of ``accredited investor'' in 17 CFR
230.501(a) (``Rule 501(a)'') followed by the three main operative
provisions--17 CFR 230.504 (``Rule 504''),\3\ 17 CFR 230.506(b) (``Rule
506(b)''),\4\ and 17 CFR 230.506(c) (``Rule 506(c)'').\5\ The
Commission has stated that the ``accredited investor'' definition under
Regulation D is intended to capture persons whose financial
sophistication renders the protection of the Securities Act's
registration process unnecessary.\6\
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\1\ 17 CFR 230.500 through 230.508.
\2\ Approximately $400 billion was raised in Regulation D
offerings (excluding pooled funds) between July 1, 2024 and June 30,
2025. See Staff Report from Office of the Advocate for Small
Business Capital Formation (``OASB'') Fiscal Year 2025 OASB Annual
Report (Jan. 8, 2026) at 14, available at <a href="https://www.sec.gov/files/2025-oasb-staff-report.pdf">https://www.sec.gov/files/2025-oasb-staff-report.pdf</a>.
\3\ Rule 504 provides an exemption from registration under the
Securities Act for the offer and sale of up to $10 million of
securities in a 12-month period from an unlimited number of
investors (without regard to whether those investors are
accredited).
\4\ Rule 506(b) is a safe harbor under section 4(a)(2) of the
Securities Act that permits issuers to raise any amount from an
unlimited number of accredited investors but limits the number of
non-accredited investors to 35 in any 90-calendar-day period. The
rule does not permit general solicitation and, where non-accredited
investors purchase in the Rule 506(b) offering, the information
requirements in 17 CFR 230.502(b) must be met. See 17 CFR
230.506(b)(1); 17 CFR 230.506(b)(2)(i); 17 CFR 230.502(b).
\5\ Rule 506(c) provides an exemption from registration under
the Securities Act, and permits issuers to raise any amount from an
unlimited number of accredited investors. The exemption permits
general solicitation, but issuers may not make any sales to non-
accredited investors under Rule 506(c), and the issuer must take
reasonable steps to verify that all purchasers are accredited. See
also Jumpstart Our Business Startups Act of 2012, Public Law 112-
106, sec. 201(a), 126 Stat. 306 (2012) (directing the Commission to
revise its rules ``to provide that the prohibition against general
solicitation or general advertising contained in section 230.502(c)
of such title [17] shall not apply to offers and sales of securities
made pursuant to section 230.506, provided that all purchasers of
the securities are accredited investors . . . . Section 230.506 of
title 17, Code of Federal Regulations, as revised pursuant to this
section, shall continue to be treated as a regulation issued under
section 4(2) of the Securities Act of 1933 (15 U.S.C. 77d(2))'').
\6\ See Accredited Investor Definition, Release No. 33-10824
(Aug. 26, 2020) [85 FR 64234, n.7 and accompanying text (Oct. 9,
2020)] (``Accredited Investor Adopting Release''); Regulation D
Revisions; Exemption for Certain Employee Benefit Plans, Release No.
33-6683 (Jan. 16, 1987) [52 FR 3015 (Jan. 30, 1987)]. See also SEC
v. Ralston Purina Co., 346 U.S. 119, 125 (1953) (taking the position
that the availability of the section 4(a)(2) exemption ``should turn
on whether the particular class of persons affected needs the
protection of the [Securities] Act. An offering to those who are
shown to be able to fend for themselves is a transaction `not
involving any public offering''').
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The definition of ``accredited investor'' is a cornerstone of
Regulation D and also plays an important role in other Federal
securities law contexts.\7\ Qualifying for accredited investor status
is significant because accredited investors may, under Commission
rules, participate in investment opportunities that are generally not
available to non-accredited investors, such as investments in private
companies and offerings by private funds.
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\7\ For example, each of 17 CFR 230.251 through 230.263
(``Regulation A'') and 17 CFR 227.100 through 227.504 (``Regulation
Crowdfunding'') contains limitations on the amount an investor may
invest if such investor is not an accredited investor. See 17 CFR
230.251(d)(2)(i)(C) and 17 CFR 227.100(a)(2).
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Accredited investors are natural persons and entities that come
within, or that the issuer reasonably believes come within, any of the
enumerated categories contained in Rule 501(a). Natural persons may
qualify as accredited investors if they are:
<bullet> Any director, executive officer, or general partner of the
issuer of the securities being offered or sold or of a general partner
of that issuer, pursuant to 17 CFR 230.501(a)(4);
<bullet> Individuals who have a net worth exceeding $1,000,000
(excluding the value of the individual's primary residence and any
indebtedness secured by such residence up to the estimated value of the
residence), either alone or with their spouse or spousal equivalent,
pursuant to 17 CFR 230.501(a)(5);
<bullet> Individuals who had an income in excess of $200,000 in
each of the two most recent years, or joint income with the
individual's spouse or spousal equivalent in excess of $300,000 in each
of those years, and have a reasonable expectation of reaching the same
income level in the current year, pursuant to 17 CFR 230.501(a)(6);
<bullet> Individuals who are holders in good standing of one or
more professional certifications or designations or credentials from an
accredited educational institution that the Commission has designated
as qualifying an individual for accredited investor status, pursuant to
17 CFR 230.501(a)(10) (``Rule 501(a)(10)'');
<bullet> Individuals who are ``knowledgeable employees,'' \8\ under
the Investment Company Act of 1940 (the ``Investment Company Act''),\9\
of the private-fund issuer of the securities being offered or sold,
pursuant to 17 CFR 230.501(a)(11); or
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\8\ 17 CFR 270.3c-5(a)(4).
\9\ 15 U.S.C. 80a-1 et seq.
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<bullet> Individuals who are ``family clients'' of a ``family
office'' \10\ under the Investment Advisers Act of 1940 (the ``Advisers
Act'') \11\ and whose prospective investment in the issuer is directed
by such family office in accordance with 17 CFR 230.501(a)(12)(iii),
pursuant to 17 CFR 230.501(a)(13) (``Rule 501(a)(13)'').
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\10\ 17 CFR 275.202(a)(11)(G)-1 (defining ``family office'').
\11\ 15 U.S.C. 80b-1 et seq.
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Various institutions may qualify as accredited investors based on
their status alone or on a combination of their status and the amount
of their total assets or investments. Institutions that qualify
include:
<bullet> Banks, savings and loan associations; brokers or dealers
registered pursuant to section 15 of the Securities Exchange Act of
1934; \12\ certain investment advisers; insurance companies; investment
companies registered under the Investment Company Act or business
development companies as defined in section 2(a)(48) of the Investment
Company Act; \13\ and certain specialized investment
[[Page 63359]]
companies; \14\ plans established and maintained by a state, its
political subdivisions, or any agency or instrumentality of a state or
its political subdivisions, for the benefit of its employees, if such
plan has total assets in excess of $5 million; employee benefit plans
(within the meaning of the Employee Retirement Income Security Act of
1974 \15\) if a bank, savings and loan association, insurance company,
or registered investment adviser makes the investment decisions, or if
the plan has total assets in excess of $5 million, or, if a self-
directed plan, with investment decisions made solely by persons who are
accredited investors, pursuant to 17 CFR 230.501(a)(1) (``Rule
501(a)(1)'');
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\12\ 15 U.S.C. 78o.
\13\ 15 U.S.C. 80a-2(a)(48).
\14\ This includes small business investment companies licensed
under section 301(c) or (d) of the Small Business Investment Act of
1958 [15 U.S.C. 661 et seq.], and any rural business investment
company as defined in section 384A of the Consolidated Farm and
Rural Development Act [7 U.S.C. 1921].
\15\ 29 U.S.C. 1001 et seq.
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<bullet> Any private business development company as defined in
section 202(a)(22) of the Advisers Act,\16\ pursuant to 17 CFR
230.501(a)(2) (``Rule 501(a)(2)'');
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\16\ 15 U.S.C. 80b-2(a)(22).
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<bullet> Charitable organizations, corporations, business trusts,
partnerships, or limited liability companies not formed for the
specific purpose of acquiring the securities offered, with total assets
in excess of $5,000,000, pursuant to 17 CFR 230.501(a)(3) (``Rule
501(a)(3)''); \17\
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\17\ A charitable organization is as described in section
501(c)(3) of the Internal Revenue Code [26 U.S.C. 501(c)(3)].
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<bullet> Trusts with total assets in excess of $5,000,000, not
formed for the specific purpose of acquiring the securities offered,
whose purchase is directed by a sophisticated person as described in 17
CFR 230.506(b)(2)(ii), pursuant to 17 CFR 230.501(a)(7) (``Rule
501(a)(7)'');
<bullet> Entities in which all of the equity owners are accredited
investors, pursuant to 17 CFR 230.501(a)(8) (``Rule 501(a)(8)'');
<bullet> Any entity, of a type not listed in Rules 501(a)(1), (2),
(3), (7), or (8), not formed for the specific purpose of acquiring the
securities offered, owning investments in excess of $5,000,000,
pursuant to 17 CFR 230.501(a)(9);
<bullet> ``Family offices'' meeting certain requirements, pursuant
to 17 CFR 230.501(a)(12) (``Rule 501(a)(12)''); \18\ and
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\18\ The family office must have assets under management in
excess of $5,000,000; not been formed for the specific purpose of
acquiring the securities offered; and its prospective investments
directed by a person who has such knowledge and experience in
financial and business matters that such family office is capable of
evaluating the merits and risks of the prospective investment. See
17 CFR 230.501(a)(12)(i) through 230.501(a)(12)(iii).
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<bullet> Entities that are ``family clients'' of a ``family
office'' that meets the requirements of Rule 501(a)(12), pursuant to
Rule 501(a)(13).
B. Background on Rule 501(a)(10) and Overview of Potential Designations
Rule 501(a)(10) confers accredited investor status on any natural
person holding in good standing one or more professional certifications
or designations or credentials from an accredited educational
institution that the Commission has designated as qualifying an
individual for accredited investor status.\19\ In adopting Rule
501(a)(10), the Commission stated that certain ``professional
credentials and experience should enable [investors that hold such
credentials] to assess investment opportunities, appropriately allocate
capital based on their individual circumstances, including whether to
reallocate investment capital between private investments and other
equivalent-sized investments, and otherwise make appropriately informed
decisions regarding their financial interests, including their ability
to bear the financial risk.'' \20\
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\19\ Rule 501(a)(10) does not expressly define what constitutes
good standing. In connection with the adoption of Rule 501(a)(10),
the Commission stated that in addition to passing the relevant exam,
``maintaining an active certification, designation, or license is
sufficient to demonstrate the individual's financial sophistication
to invest in exempt offerings . . . . [and] that an inactive
certification, designation, or license, particularly when the
certification or designation has been inactive for an extended
period of time, could lessen the validity of the certification or
designation as a measure of financial sophistication.'' Accredited
Investor Adopting Release at 64242. See infra section II.B.1.
\20\ Id. at 64241.
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Rule 501(a)(10) contains the following non-exclusive list of
attributes that the Commission will consider in determining whether to
designate a professional certification or designation or credential
from an accredited educational institution as qualifying for accredited
investor status:
<bullet> The certification, designation, or credential arises out
of an examination or series of examinations administered by a self-
regulatory organization or other industry body or is issued by an
accredited educational institution, under 17 CFR 230.501(a)(10)(i)
(``Rule 501(a)(10)(i)'');
<bullet> The examination or series of examinations is designed to
reliably and validly demonstrate an individual's comprehension and
sophistication in the areas of securities and investing, under 17 CFR
230.501(a)(10)(ii) (``Rule 501(a)(10)(ii)'');
<bullet> Persons obtaining such certification, designation, or
credential can reasonably be expected to have sufficient knowledge and
experience in financial and business matters to evaluate the merits and
risks of a prospective investment, under 17 CFR 230.501(a)(10)(iii)
(``Rule 501(a)(10)(iii)''); and
<bullet> An indication that an individual holds the certification
or designation is either made publicly available by the relevant self-
regulatory organization or other industry body or is otherwise
independently verifiable, under 17 CFR 230.501(a)(10)(iv) (``Rule
501(a)(10)(iv)'').\21\
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\21\ Additionally, Note 1 to paragraph 501(a)(10) specifies that
the Commission will designate professional certifications or
designations or credentials as qualifying such holders as accredited
investors by order, after notice and an opportunity for public
comment.
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In proposing Rule 501(a)(10), the Commission noted prior
recommendations to designate holding certain licenses from the
Financial Industry Regulatory Authority, Inc. (``FINRA'') as qualifying
natural persons for accredited investor status. However, the proposed
initial list did not include the Investment Banking Representative
license (``Series 79'') or Research Analyst license (``Series 86 and
87'').\22\ A number of commenters recommended the addition of the
Series 79 and/or Series 86 and 87.\23\
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\22\ See Amending the ``Accredited Investor'' Definition,
Release No. 33-10734 (Dec. 18, 2019) [85 FR 2574, 2579-2581 (Jan.
15, 2020)] (the ``Accredited Investor Proposing Release'').
\23\ See, e.g., letter from Center for Capital Markets
Competitiveness (Mar. 16, 2020) (supporting including the Series 79
and Series 86 and 87); letter from CMT (Mar. 16, 2020) (supporting
including the Series 86 and 87); letter from Federal Regulation of
Securities Committee of the Business Law Section of the American Bar
Association (May 22, 2020) (supporting including the Series 86 and
87); letter from G. Philip Rutledge (Jan. 31, 2020) (supporting
including, as accredited investors, ``individuals who took and
passed an examination required by FINRA in order to perform a
specific function with a FINRA member firm and, at the time of the
investment, remained an associated person with a FINRA member'');
letter from Raymond Wu (Feb. 21, 2020) (supporting including the
Series 86 and 87). One commenter specifically opposed including the
Series 86 and 87. See letter from Alex Naegele (Jan. 9, 2020). The
comment letters to the Accredited Investor Proposing Release are
available at <a href="https://www.sec.gov/comments/s7-25-19/s72519.htm">https://www.sec.gov/comments/s7-25-19/s72519.htm</a>.
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Consistent with the proposal, at the time of adoption of Rule
501(a)(10), the Commission issued an order designating the General
Securities Representative license (Series 7), Private Securities
Offerings Representative license (Series 82), and Investment Adviser
Representative license (Series 65) as qualifying a holder of such
licenses in good standing for accredited investor
[[Page 63360]]
status.\24\ In the Accredited Investor Adopting Release, the Commission
expressly noted that ``[a]lthough other professional certifications,
designations, and credentials, such as other FINRA exams, a specific
accredited investor exam, other educational credentials, or
professional experience received broad commenter support, we are taking
a measured approach to the expansion of the definition . . . . [and] we
believe it is appropriate to consider these other credentials after
first gaining experience with the revised rules.'' \25\
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\24\ The exams for the General Securities Representative license
(Series 7) and the Private Securities Offerings Representative
license (Series 82) are developed and administered by FINRA, and the
exam for the Investment Adviser Representative license (Series 65)
was developed by the North American Securities Administrators
Association and is administered by FINRA. See Order Designating
Certain Professional Licenses as Qualifying Natural Persons for
Accredited Investor Status, Release No. 33-10823 (Aug. 26, 2020) [85
FR 64234 (Oct. 9, 2020)].
\25\ Accredited Investor Adopting Release at 64243. Certain
holders of the Series 79 may also hold a Series 7 or Series 82, if
they actively market offerings and interact with investors or
potential investors. See FINRA, Series 79--Investment Banking
Representative Exam (``Series 79 Licensing''), available at <a href="https://www.finra.org/registration-exams-ce/qualification-exams/series79">https://www.finra.org/registration-exams-ce/qualification-exams/series79</a>
(``The Investment Banking Representative registration category is
meant to include investment bankers who, as part of their job
activities, advise on or facilitate the marketing of an offering . .
. . [I]t would not include persons who actively market the offering
and interact with investors or potential investors, such as a person
who is engaging in road show activities. Such a person would also
need to be registered as a General Securities Representative (SIE +
Series 7 exam) or Private Securities Offerings Representative (SIE +
Series 82 exam).'') (last retrieved Sept. 24, 2026).
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The Commission has now had over five years of experience with the
initially designated professional licenses. There is no evidence that
we are aware of to suggest that the expansion in 2020 of the accredited
investor definition to include these types of financially sophisticated
investors has created investor protection concerns. Since the adoption
of Rule 501(a)(10) and the initial designations, the Commission has
received recommendations to further expand the number of investors that
qualify as accredited investors under Rule 501(a)(10).\26\ The
arguments in some of these recommendations echo the arguments contained
in letters from commenters in connection with the adoption of Rule
501(a)(10), which stated that the definition limits access to private
investments primarily to those who are wealthy,\27\ have close ties to
the issuer,\28\ or have certain jobs in the financial industry.\29\ The
Commission has also received petitions for rulemaking requesting
changes to the accredited investor definition.\30\
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\26\ See, e.g., Report on the 45th Annual Small Business Forum
(July 27, 2026) at 17, available at <a href="https://www.sec.gov/files/2026-oasb-annual-forum-report.pdf">https://www.sec.gov/files/2026-oasb-annual-forum-report.pdf</a> (recommending that the Commission
``expand the accredited investor definition to include additional
measures of sophistication, including through an investor test and
experience''); Report on the 44th Annual Small Business Forum (Sept.
22, 2025) at 18, available at <a href="https://www.sec.gov/files/2025-oasb-annual-forum-report.pdf">https://www.sec.gov/files/2025-oasb-annual-forum-report.pdf</a> (recommending that the Commission ``[e]xpand
the accredited investor definition to include additional measures of
sophistication''); SEC Small Business Capital Formation Advisory
Committee Recommendation regarding the Accredited Investor
Definition (May 1, 2024), available at <a href="https://www.sec.gov/files/recs-accredited-investor-definition.pdf">https://www.sec.gov/files/recs-accredited-investor-definition.pdf</a> (recommending in part that
persons not meeting the definition be able to undertake an
educational program, which would allow them to invest a percent of
their assets); OASB, Annual Report for Fiscal Year 2023 at 75,
available at <a href="https://www.sec.gov/files/2023-oasb-annual-report.pdf">https://www.sec.gov/files/2023-oasb-annual-report.pdf</a>
(recommending expansion of the accredited investor definition to add
qualitative professional criteria and alternative ways to
demonstrate financial sophistication). See also SEC Investor
Advisory Committee Recommendation regarding Retail Investor Access
to Private Market Assets (Sept. 18, 2025), available at <a href="https://www.sec.gov/files/iac-recommendation-private-market-assets-final-09182025.pdf">https://www.sec.gov/files/iac-recommendation-private-market-assets-final-09182025.pdf</a> (not taking a position on whether the accredited
investor definition should be expanded, but recommending that, if
the definition were to be expanded, the Commission consider
expanding the accredited investor definition to cover additional
professional certifications or designations or credentials).
\27\ See, e.g., letter from David R. Burton (May 1, 2020) (``D.
Burton'') (stating that ``people outside of the financial industry
should have a means to prove that they have the knowledge and
sophistication to qualify as [accredited investors] . . . .
[o]therwise, the Commission will effectively creat[e] barriers where
only affluent people or those it regulates in the financial industry
have access to these investments.''); letter from Tron Black (Nov.
20, 2019, last updated Dec. 24, 2019).
\28\ See, e.g., letter from Bruce A. Wallick (Dec. 19, 2019)
(stating that the ``[accredited investor definition] should include
an opportunity for self-taught investors to demonstrate their
financial sophistication and achieve accredited status.''); letter
from D. Burton.
\29\ See, e.g., letter from Crowdwise, LLC (Mar. 1, 2020)
(stating that it is crucial for the Commission to ``consider how
self-taught, sophisticated investors who do not have any other
financial credentials (nor the ability to get them) or finance
industry experience can still have access to the same investment
opportunities that are available to accredited investors today.'');
letter from D. Burton (stating that expansion of the accredited
investor definition ``will help investors that would typically
otherwise be barred from investing in Regulation D offerings (most
often younger investors or those that live outside of high-income
metropolitan areas).'').
\30\ See Benjamin Bartel, Petition for Rulemaking to Amend the
Accredited Investor Definition in Rule 501(a) of SEC Regulation D
(Sept. 25, 2025), available at <a href="https://www.sec.gov/files/rules/petitions/2025/petn4-871.pdf">https://www.sec.gov/files/rules/petitions/2025/petn4-871.pdf</a>; Fabricio R. Murillo Garcia, Petition
for Modification of Definition of Accredited Investors (Feb. 13,
2024), available at <a href="https://www.sec.gov/files/rules/petitions/2024/petn4-823.pdf">https://www.sec.gov/files/rules/petitions/2024/petn4-823.pdf</a>; Nicholas Morgan, Investor Choice Advocates Network,
Rulemaking petition to reduce the diversity, equity, and inclusion
(``DEI'') barriers for ``accredited investors'' by replacing the net
worth and income requirements of Rule 501(a) under the Securities
Act of 1933 with non-financial metrics (Nov. 9, 2022), available at
<a href="https://www.sec.gov/files/rules/petitions/2022/petn4-796.pdf">https://www.sec.gov/files/rules/petitions/2022/petn4-796.pdf</a>; Benny
R. Brown, Request to change the rules which qualifies an individual
or individuals as an accredited investor (Apr. 26, 2021), available
at <a href="https://www.sec.gov/files/rules/petitions/2021/petn4-773.pdf">https://www.sec.gov/files/rules/petitions/2021/petn4-773.pdf</a>. The
Commission has considered these petitions in connection with this
notice and the other notices published elsewhere in this issue of
the Federal Register. See infra note 31.
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For the reasons set forth in section II, we believe that holding
either a Series 79 or a Series 86 and 87 in good standing would satisfy
the standard in Rule 501(a)(10).\31\ Accordingly, as required by Rule
501(a)(10), we are providing notice and an opportunity for public
comment on potential designation of the Series 79 or a Series 86 and 87
as qualifying natural persons for accredited investor status.\32\
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\31\ We are also concurrently providing notice pursuant to Note
1 to paragraph 501(a)(10) with respect to the potential designation
of each of the following as qualifying natural persons for
accredited investor status: the passage of an accredited investor
exam to be developed by FINRA; holding a license as a U.S. certified
public accountant in good standing; holding a charter as a Chartered
Financial Analyst in good standing; and holding a certification as a
Certified Financial Planner in the United States in good standing.
See Potential Designation of Passage of an Accredited Investor Exam
to be Developed by FINRA as Qualifying Natural Persons for
Accredited Investor Status; Potential Designation of U.S. Certified
Public Accountant License as Qualifying Natural Persons for
Accredited Investor Status; Potential Designation of Chartered
Financial Analyst Designation as Qualifying Natural Persons for
Accredited Investor Status; Potential Designation of Certified
Financial Planner Certification as Qualifying Natural Persons for
Accredited Investor Status published elsewhere in this issue of the
Federal Register.
\32\ As is the case for the other prongs of the accredited
investor definition, individuals holding a Series 79 or a Series 86
and 87 would only themselves qualify as accredited investors and
could not rely on their status as accredited investors to purchase
securities on behalf of another person.
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II. Discussion
A. Series 79 and Series 86 and 87 Requirements
1. Background
We believe designating holding the Series 79 and holding the Series
86 and 87 as qualifying natural persons for accredited investor status
would be consistent with the standard in Rule 501(a)(10) because such
licenses meet the non-exclusive attributes the Commission identified in
Rule 501(a)(10) as relevant to its consideration of adding additional
professional certifications or designations or credentials.
As with the currently designated FINRA licenses, the Series 79 and
the Series 86 and 87 are registrations held with FINRA.\33\ In order to
hold a Series 79 registration, an individual must
[[Page 63361]]
fulfill the requisite eligibility requirements and pass the Series 79
exam (the ``Series 79 Exam'').\34\ The Series 79 Exam is designed to
assess the knowledge and skills that FINRA has determined are necessary
``to perform the critical functions of an investment banking
representative, including advising on or facilitating debt or equity
securities offerings through a private placement or a public offering
and mergers and acquisitions.'' \35\
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\33\ See Series 79 Licensing; FINRA, Series 86 and 87--Research
Analyst Exams (``Series 86 and 87 Licensing''), available at <a href="https://www.finra.org/registration-exams-ce/qualification-exams/series86-87">https://www.finra.org/registration-exams-ce/qualification-exams/series86-87</a>
(last retrieved Sept. 24, 2026).
\34\ See id. From Nov. 2, 2009 to May 3, 2010, FINRA (as its
predecessor the National Association of Securities Dealers
(``NASD'')) permitted Series 7 or Series 7-equivalent registered
representatives ``who function in the firm's investment banking
business as described in NASD Rule 1032(i)'' to ``opt in to the
Investment Banking Representative position without having to take
the Series 79 Exam . . . . '' NASD, Regulatory Notice 09-41 (July
2009) at 7. After May 3, 2010, candidates who wish to engage in the
specified investment banking activities have been required to pass
the Series 79 Exam or obtain a waiver, ``regardless of whether or
not they have a Series 7 or Series 7-equivalent registration.'' Id.
at 8. See also FINRA Rule 1210.03 (providing that ``FINRA may, in
exceptional cases and where good cause is shown, waive the
applicable qualification examination(s) and accept other standards
as evidence of an applicant's qualifications for registration'').
\35\ See Series 79 Licensing.
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In order to hold a Series 86 and 87 registration, an individual
must fulfill the eligibility requirements and pass both the Series 86
exam (the ``Series 86 Exam'') and the Series 87 exam (the ``Series 87
Exam'').\36\ The Series 86 and 87 Exams are designed to assess the
knowledge and skills that FINRA has determined are necessary ``to
perform the critical functions of a research analyst, including
preparation of written or electronic communications that analyze equity
securities and/or companies and industry sectors.'' \37\ FINRA is
responsible for developing and scoring each of the Series 79, Series
86, and Series 87 Exams.\38\ Based on information provided by FINRA
staff to Commission staff, as of August 2026, we estimate there are
approximately 57,000 Series 79 holders and approximately 5,900 Series
86 and 87 holders.
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\36\ See Series 86 and 87 Licensing. A candidate who passed both
Level I and Level II of the Chartered Financial Analyst exam or
passed both Level I and Level II of the Chartered Market Technician
Certification exam is permitted to request an exemption from the
Series 86 Exam. See id.
\37\ See Series 86 and 87 Licensing.
\38\ See id.; Series 79 Licensing.
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2. Eligibility Requirements
Prior to applying for the Series 79 or the Series 86 and 87, a
candidate must be associated with and sponsored by a FINRA member or
other applicable self-regulatory organization member firm.\39\ In
addition to passing the Series 79 Exam or the Series 86 and 87 Exams,
which is discussed in sections II.A.3.i and II.A.3.ii, passing the
Securities Investment Essentials Exam (``SIE'') is a co-requisite to
obtaining a Series 79 or Series 86 and 87.\40\
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\39\ See Series 79 Licensing; Series 86 and 87 Licensing.
\40\ See Series 79 Licensing; Series 86 and 87 Licensing. The
SIE tests knowledge of ``basic securities industry information
including concepts fundamental to working in the industry, such as
types of products and their risks; the structure of the securities
industry markets, regulatory agencies and their functions; and
prohibited practices.'' See FINRA, Securities Industry Essentials
(SIE) Exam (``SIE Exam Overview''), available at <a href="https://www.finra.org/registration-exams-ce/qualification-exams/securities-industry-essentials-exam">https://www.finra.org/registration-exams-ce/qualification-exams/securities-industry-essentials-exam</a> (last retrieved Sept. 24, 2026). See also
supra note 36 (discussing exemptions from the Series 86 Exam).
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3. Exams
i. Series 79 Exam Contents
Over a two-hour and thirty-minute period, the Series 79 Exam tests
investment banking related knowledge and skills through 80 (75 scored
and 5 unscored) multiple-choice questions on the following topics:
<bullet> Collection, Analysis and Evaluation of Data (approximately
49 percent of the Series 79 Exam): covering, among other things, the
financial analysis of companies and industries, including modeling
financial performance and determining valuation; the collection of
information relating to the financial performance, securities
issuances, and transactions of both public and private companies
through publicly available data and commercial databases; and
performing the due diligence process on companies conducting private or
public offerings of securities;
<bullet> Underwriting/New Financing Transactions, Types of
Offerings and Registration of Securities (approximately 27 percent of
the Series 79 Exam): covering, among other things, the structuring of,
and rules governing, offerings of securities exempt from registration
and the process for and rules governing registered offerings of
securities; and
<bullet> Mergers and Acquisitions (M&As), Tender Offers and
Financial Restructuring Transactions (approximately 24 percent of the
Series 79 Exam): covering, among other things, the structuring and
execution of both sell-side and buy-side M&A transactions; regulations
governing tender offers; and the process for and rules governing
financial restructuring, such as bankruptcy.\41\
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\41\ See FINRA, Investment Banking Representative Qualification
Exam (Series 79) Content Outline, available at <a href="https://www.finra.org/sites/default/files/2025-10/Series_79_Content_Outline.pdf">https://www.finra.org/sites/default/files/2025-10/Series_79_Content_Outline.pdf</a> (last retrieved Sept. 24, 2026).
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ii. Series 86 and 87 Exams
Over a four-hour and thirty-minute period, the Series 86 Exam tests
research related knowledge and skills through 95 (85 scored and 10
unscored) multiple-choice questions on the following topics:
<bullet> Information and Data Collection (approximately 21 percent
of the Series 86 Exam): covering, among other things, gathering (1)
macroeconomic data (including knowledge of economic indicators, market
forces, fiscal and monetary policy, short- and long-term trends in the
economy and domestic and international issues, and key economic drivers
that impact the covered industry) and (2) information about the
industry sector (including knowledge of current industry status, short-
and long-term trends within the industry sector, product demand and
profitability assessment, and relationships of companies in the
industry sector and peripheral sectors);
<bullet> Data Verification and Analysis (approximately 33 percent
of the Series 86 Exam): covering, among other things, analyzing the
data obtained about companies, the industry sector, competition, and
supply and demand in the industry sector, including conducting
fundamental analyses; and
<bullet> Valuation and Forecasting (approximately 46 percent of the
Series 86 Exam): covering, among other things, (1) making financial
projections about a company using qualitative and quantitative data
(including knowledge of forecasts of key financial statements and
evaluation of assumptions and support of the theory based on the data
that were analyzed), (2) determining a company's valuation (including
knowledge of common metrics used to determine a company's valuation,
such as price to earnings, price-to-book, price to free cash flow, debt
to EBITDA, discounted cash flow, leverage ratio, and interest coverage
ratio), and (3) forecasting the future valuation of a company
(including knowledge of characteristics of markets, factors that could
impact the perceived risk of an investment, technical analysis, large
shareholder exposure, activist investors, and other valuation
considerations).\42\
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\42\ See FINRA, Research Analyst Qualification Examinations
(Series 86 and 87) Content Outline, available at <a href="https://www.finra.org/sites/default/files/2023-03/Series_86_87_Content_Outline_Revised.pdf">https://www.finra.org/sites/default/files/2023-03/Series_86_87_Content_Outline_Revised.pdf</a> (last retrieved Sept. 24,
2026).
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Over a one-hour and forty-five-minute period, the Series 87 Exam
tests research related knowledge and skills through 55 (50 scored and 5
unscored) multiple-choice questions on the following topics:
[[Page 63362]]
<bullet> Preparation of Research Reports (approximately 72 percent
of the Series 87 Exam): covering, among other things, (1) adhering to
regulatory requirements in preparing research reports (including
knowledge of disclosure requirements, necessary approvals, regulatory
and compliance requirements, and conflicts of interest) and (2)
preparing various research reports supported by evidence and analysis;
and
<bullet> Dissemination and Marketing of Information (approximately
28 percent of the Series 87 Exam): covering, among other things,
presenting and discussing research with the various individuals and/or
groups and disseminating information via various means.\43\
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\43\ See id.
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iii. Exam Administration
To be eligible to take the Series 79 Exam or the Series 86 and 87
Exams, candidates must be associated with a FINRA member firm or other
applicable self-regulatory organization member firm, which must submit
an application on the candidate's behalf through FINRA's Central
Registration Depository.\44\ However, the exams are delivered by a
third party.\45\ The fees to take the exams are currently: $395 for the
Series 79 Exam, $295 for the Series 86 Exam, and $195 for the Series 87
Exam.\46\ The exams may be taken in-person at designated test
centers.\47\ After a candidate is enrolled to take an exam, FINRA
provides a 120-day window in which the exams must be taken.\48\ Most
test centers are open at least five days a week (except for major
holidays) and candidates are able to schedule a time based on
appointment availability.
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\44\ See FINRA, Register a New Candidate, available at <a href="https://www.finra.org/registration-exams-ce/individuals/register-new-candidate">https://www.finra.org/registration-exams-ce/individuals/register-new-candidate</a> (last retrieved Sept. 24, 2026).
\45\ See FINRA, Schedule an Exam (``Exam Scheduling
Procedures''), available at <a href="https://www.finra.org/registration-exams-ce/qualification-exams/schedule-exam">https://www.finra.org/registration-exams-ce/qualification-exams/schedule-exam</a> (last retrieved Sept. 24,
2026).
\46\ See Series 79 Licensing; Series 86 and 87 Licensing. The
fee to take the SIE Exam, a co-requisite to obtaining a Series 79 or
Series 86 and 87, is currently $100. See SIE Exam Overview.
\47\ See Series 79 Licensing; Series 86 and 87 Licensing; Exam
Scheduling Procedures. As with FINRA's existing exams, the Series 79
Exam and the Series 86 and 87 Exams are designed to comply with the
Americans with Disabilities Act [Pub. L. 101-336, 104 Stat. 328
(1990)], providing testing modifications and aids to individuals
with disabilities and/or learning impairments that substantially
limit a major life activity, such as learning, speaking, hearing and
vision. FINRA also considers online testing accommodations for
candidates who live more than 150 miles from a test center. See Exam
Scheduling Procedures; FINRA, Exam Candidates Requiring Testing
Accommodations, available at <a href="https://www.finra.org/registration-exams-ce/qualification-exams/candidates-disabilities">https://www.finra.org/registration-exams-ce/qualification-exams/candidates-disabilities</a> (last retrieved
Sept. 24, 2026).
\48\ This 120-day window starts the day following successful
enrollment, and if the candidate does not take an exam within that
window, then the candidate would forfeit payment of exam fees and
would need to reschedule and pay the exam fee. There are also fees
for exam appointments rescheduled or cancelled within ten business
days of the relevant exam. See Exam Scheduling Procedures; FINRA,
Reschedule or Cancel Your Appointment, available at <a href="https://www.finra.org/registration-exams-ce/qualification-exams/cancellation-policy">https://www.finra.org/registration-exams-ce/qualification-exams/cancellation-policy</a> (last retrieved Sept. 24, 2026).
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4. Continuing Education
In order to maintain a Series 79 or a Series 86 and 87, a person
must complete continuing education, which consists of two elements: the
``Regulatory Element,'' which FINRA uses to provide training on
significant rule changes and regulatory developments relevant to the
Series 79 and Series 86 and 87 and must be completed annually; \49\ and
the ``Firm Element,'' which requires the firm with which the Series 79
or Series 86 and 87 holder is associated to design a program that
``enhances the securities knowledge, skills and professionalism [of the
Series 79 or Series 86 and 87 holder].'' \50\ The Firm Element requires
``broker-dealers to establish a formal training program to keep
registered persons . . . up to date on topics related to professional
responsibility and to the role, activities or responsibilities of the
registered person.'' \51\
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\49\ See FINRA, View a Regulatory Element Learning Plan,
available at <a href="https://www.finra.org/registration-exams-ce/continuing-education/regulatory-element-topics">https://www.finra.org/registration-exams-ce/continuing-education/regulatory-element-topics</a> (last retrieved Sept. 24, 2026).
See also FINRA Rule 1240.
\50\ See Continuing Education Council, Frequently Asked
Questions, available at <a href="https://cecouncil.com/frequently-asked-questions/">https://cecouncil.com/frequently-asked-questions/</a> (last retrieved Sept. 24, 2026).
\51\ See FINRA, Continuing Education, available at <a href="https://www.finra.org/registration-exams-ce/continuing-education">https://www.finra.org/registration-exams-ce/continuing-education</a> (last
retrieved Sept. 24, 2026).
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5. Public Verification
FINRA maintains the BrokerCheck website, which is a free tool for
the public to research the background and experience of financial
advisers and firms, including investment-related licensing information
(including industry exams an individual has passed, such as the Series
79 and Series 86 and 87, and what registrations individuals currently
hold).\52\
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\52\ See FINRA, BrokerCheck, available at <a href="https://brokercheck.finra.org/">https://brokercheck.finra.org/</a>.
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B. Rationale for Designation
1. Rule 501(a)(10) Generally and Rule 501(a)(10)(i)
We believe it would be appropriate to designate each of the Series
79 and Series 86 and 87 held in good standing as a professional
certification qualifying individuals holding such licenses for
accredited investor status pursuant to Rule 501(a)(10). The addition of
each of the Series 79 and Series 86 and 87 as designated professional
certifications would provide two additional knowledge-based means for
individuals to qualify as accredited investors while appropriately
balancing investor protection concerns.\53\
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\53\ As the Commission stated in connection with adoption of
Rule 501(a)(10) ``[w]e believe that the amendments we are adopting
in [the Accredited Investor Adopting Release] provide appropriate
investor protections while facilitating capital formation.'' See
Accredited Investor Adopting Release at 64256. See also supra note
20.
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Rule 501(a)(10) requires that any professional certifications and
designations and other credentials designated as qualifying such holder
for accredited investor status be held in good standing.\54\ As with
the previously designated FINRA licenses,\55\ we believe that the
standards set by FINRA for a Series 79 holder and Series 86 and 87
holder to retain their license in an active status are an appropriate
measure of good standing.\56\ Accordingly, licensees that hold
inactive, terminated, or suspended licenses would not be considered in
good standing.
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\54\ See supra note 19.
\55\ See Accredited Investor Adopting Release at 64242.
\56\ See supra section II.A.4.
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Rule 501(a)(10)(i) additionally requires that a designated
certification, designation, or credential arise out of an examination
or series of examinations administered by a self-regulatory
organization or other industry body or be issued by an accredited
educational institution. As described in section II.A.1, the Series 79
Exam, which is a prerequisite to holding a Series 79, and the Series 86
and 87 Exams, which are prerequisites to holding a Series 86 and 87,
are designed and administered by FINRA, which is a self-regulatory
organization.\57\
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\57\ See Self-Regulatory Organizations; National Association of
Securities Dealers, Inc.; Order Approving Proposed Rule Change to
Amend the By-Laws of NASD to Implement Governance and Related
Changes to Accommodate the Consolidation of the Member Firm
Regulatory Functions of NASD and NYSE Regulation, Inc., Release No.
34-56145 (July 26, 2007) [72 FR 42169 (Aug. 1, 2007)].
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2. Rules 501(a)(10)(ii) and 501(a)(10)(iii)
Rule 501(a)(10)(ii) states that the Commission will consider
whether ``[t]he examination or series of examinations is designed to
reliably and validly demonstrate an individual's comprehension and
sophistication in the areas of securities and investing.'' Rule
501(a)(10)(iii) states the Commission will consider whether
[[Page 63363]]
``[p]ersons obtaining [a] certification, designation, or credential
[designated under Rule 501(a)(10)] can reasonably be expected to have
sufficient knowledge and experience in financial and business matters
to evaluate the merits and risks of a prospective investment.''
We believe that the passage of either the Series 79 Exam, or the
Series 86 and 87 Exams, would satisfy the objectives of Rule
501(a)(10)(ii). We further believe that the passage of the Series 79
Exam (combined with the satisfaction of the requirements to obtain a
Series 79) and the passage of the Series 86 and 87 Exams (combined with
the satisfaction of the requirements to obtain a Series 86 and 87)
would each satisfy the objectives of Rule 501(a)(10)(iii). As described
in more detail in section II.A.3.i, the Series 79 Exam is designed to
evaluate a person's knowledge and skill in the area of advising on, or
facilitating, debt or equity securities offerings through a private
placement or a public offering. In particular, the Collection, Analysis
and Evaluation of Data section of the Series 79 Exam tests knowledge
and skills related to collecting, analyzing, and evaluating information
related to public and private companies' financial performance and
prior transactions, modeling financial performance, and determining the
valuation of companies. In addition, the Underwriting/New Financing
Transactions, Types of Offerings and Registration of Securities section
of the Series 79 Exam tests knowledge and skills relating to the
process and rules of offering securities that are registered or exempt
from registration.
As described in more detail in section II.A.3.ii, the Series 86 and
87 Exams are designed to evaluate a person's knowledge and skill in the
area of performing the critical functions of a research analyst,
including preparation of written or electronic communications that
analyze equity securities and/or companies and industry sectors.
Specifically, the Information and Data Collection section of the Series
86 Exam tests knowledge relating to macroeconomic data and information
about industry sectors and the Data Verification and Analysis section
tests knowledge on analyzing data obtained about companies, industry
sectors, competition, and supply and demand. In addition, the Valuation
and Forecasting section of the Series 86 Exam tests knowledge related
to making financial projections about a company using qualitative and
quantitative data, determining a company's valuation, and forecasting
the future valuation of a company. The Preparation of Research Reports
section of the Series 87 Exam requires understanding of valuation of
company stock, earnings analysis, business model analysis, financial
position, and quality of management.
We believe that by obtaining a Series 79, which requires passage of
the Series 79 Exam, or obtaining the Series 86 and 87, which requires
passage of the Series 86 and 87 Exams, such persons will have
demonstrated that they have the comprehension and sophistication to
evaluate the merits and risks of investment opportunities, and
ultimately, appropriately allocate capital based on their individual
circumstances, and otherwise make appropriately informed decisions
regarding their financial interests.\58\
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\58\ See Accredited Investor Adopting Release at 64241.
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Moreover, we believe that the continuing education requirements,
which are intended to ensure that Series 79 holders and Series 86 and
87 holders are educated on significant rule changes and regulatory
developments, further supports that holders of a Series 79 and holders
of a Series 86 and 87 have sufficient knowledge and experience in
financial and business matters to evaluate the merits and risks of a
prospective investment.
3. Rule 501(a)(10)(iv)
Rule 501(a)(10)(iv) states the Commission will consider whether
``[a]n indication that an individual holds the certification or
designation is either made publicly available by the relevant self-
regulatory organization or other industry body or is otherwise
independently verifiable.'' As described in section II.A.5, the public
may use the BrokerCheck website to verify whether any person holds a
Series 79 or Series 86 and 87.
C. Economic Considerations
As discussed above, we are considering whether to add each of the
Series 79 and the Series 86 and 87 to the list of designated
professional certifications, designations, or credentials that would
qualify natural persons for accredited investor status under Rule
501(a)(10). Thus, individuals who hold such a license would qualify as
accredited investors and would be able to participate in investment
opportunities that may not otherwise have been available to them,
unless they were already accredited investors based on another
criterion. This change could also impact issuers seeking to raise
capital.\59\ As with the FINRA licenses already designated under Rule
501(a)(10) (Series 7, Series 65, and Series 82), the designation of
holders of either the Series 79 or Series 86 and 87 as accredited
investors would have economic effects on investors and issuers that
would be consistent with those the Commission discussed in creating the
Rule 501(a)(10) designation process in the Accredited Investor Adopting
Release.\60\
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\59\ To the extent that the accredited investor definition is
used outside of the Federal securities laws (such as for non-Federal
securities laws that incorporate the accredited investor
definition), the designation of additional credentials might have
indirect economic effects.
\60\ See Accredited Investor Adopting Release at section VI.
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It is difficult to quantify how many additional natural persons
would qualify as accredited investors because we cannot gauge how many
of the holders of these FINRA licenses \61\ already qualify as
accredited investors based on one or more of the other eligibility
criteria in Rule 501(a), such as those for net worth, income, and other
qualifying professional certifications, designations, or
credentials.\62\ Further, it is unclear to what extent any newly
eligible accredited investors will choose to participate in exempt
offerings.
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\61\ As discussed in section II.A.1, based on information
provided by FINRA staff to Commission staff, as of August 2026, we
estimate there are approximately 57,000 Series 79 holders and
approximately 5,900 Series 86 and 87 holders.
\62\ For instance, some investors that would qualify based on
the Series 79 and the Series 86 and 87 may already qualify as
accredited investors based on income or net worth criteria in Rule
501. Such individuals also may hold other licenses or credentials
that are already designated, or that we are potentially designating,
under Rule 501(a)(10). See supra note 25 (certain holders of the
Series 79 may also hold a Series 7 or Series 82). In either
scenario, the license holder category of accredited investors may
not contribute to a meaningful net expansion of the pool of
accredited investors. For example, one source reports the average
base salary (excluding incentive compensation) of a FINRA Series 79
holder as $127,000. See Salary for Certification: Limited
Representative--Investment Banking (FINRA Series 79), Payscale,
<a href="https://www.payscale.com/research/US/Certification=Limited_Representative_-_Investment_Banking_">https://www.payscale.com/research/US/Certification=Limited_Representative_-_Investment_Banking_</a>(FINRA_Series_79)/Salary (last retrieved Sept.
24, 2026).
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Issuers are expected to benefit from the expansion of the
accredited investor definition under Rule 501(a)(10) through
potentially greater capital formation, lower cost of capital, and
greater efficiency in raising capital due to an expanded pool of
accredited investors (especially for issuers that are small or do not
have access to a network of institutional accredited investors or
persons with the required net worth or income to qualify as accredited
investors).\63\ This change may also benefit issuers in exempt
offerings by making it easier and less costly to find
[[Page 63364]]
and verify accredited investors (i.e., by reducing search costs).\64\
As discussed in section II.A.5, whether someone holds the Series 79 or
Series 86 and 87 could be easily independently verified, which would
directly reduce issuers' costs of confirming accredited investor
eligibility, relative to verifying income or net worth.\65\ This is
expected to benefit issuers and intermediaries in exempt offerings
where only accredited investors may be purchasers (such as Rule 506(c))
or where some provisions, such as limits on the number of purchasers or
investment limits, are dependent on accredited investor status (e.g.,
Rule 506(b), Regulation A, and Regulation Crowdfunding). However, to
the extent that issuers would have otherwise pursued additional
financing from accredited investors meeting the existing definition or
engaged in an offering that is not dependent on accredited investor
participation (such as a registered securities offering), the amount of
additional capital formation may be limited. Still, issuers may benefit
from greater flexibility in how they may raise capital, which could
result in some cost savings and a lower cost of capital. For instance,
issuers undertaking a Rule 506(b) offering may incur lower costs if all
of their purchasers are accredited investors as compared to if not all
of their purchasers are accredited investors, as the rule would not
require them to furnish the financial and other information prescribed
by Rule 502(b) for offerings involving non-accredited investors.\66\
For issuers in Rule 506(c) offerings, verification of accredited
investor status based on a credential that is easier to confirm may be
less costly than verification of other prongs of the accredited
investor definition (such as financial eligibility), reducing their
transaction costs.\67\ For issuers that undertake a Tier 2 Regulation A
or Regulation Crowdfunding offering, both of which are subject to
investment limits for non-accredited investors, having more accredited
investors in the offering enables higher investment amounts per
investor, which may decrease all-in offering costs.\68\ Issuers
choosing among different exempt offering alternatives may choose a
Regulation D offering if they have enough prospective investors that
meet the accredited investor definition, instead of pursuing a
Regulation A or Regulation Crowdfunding offering, potentially lowering
their compliance, intermediary, and marketing costs-per-dollar raised.
Some issuers choosing between an exempt and a registered offering may
choose an exempt offering if they have enough prospective investors
that meet the accredited investor definition, instead of pursuing a
registered offering.
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\63\ See Accredited Investor Adopting Release at 64264-65.
\64\ See Accredited Investor Adopting Release at 64264.
\65\ See supra note 52 and accompanying text. Thus, even if some
license holders already meet other accredited investor eligibility
criteria, the overall costs of verification of accredited investor
status may decrease with the designation of these licenses under
Rule 501(a)(10).
\66\ See 17 CFR 230.502(b).
\67\ See 17 CFR 230.506(c)(1) through 230.506(c)(2).
\68\ See 17 CFR 230.251(d)(2)(i)(C); 17 CFR 227.100(a)(2).
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For investors, the designation of these licenses as a means of
becoming an accredited investor could enable more natural persons who
would not otherwise meet one of the eligibility criteria in Rule
501(a), such as the income and net worth criteria, to access a broader
range of investment options, potentially enhancing their ability to
diversify and optimize portfolio allocations.\69\
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\69\ As noted above, the extent of overlap between the holders
of Series 79 and Series 86 and 87 FINRA licenses and the investors
that meet the existing accredited investor criteria is unclear.
License holders who are earlier in their careers, employed at
smaller firms, or located in lower cost-of-living geographic areas,
and thus may on average have lower incomes, may be most affected by
the potential designation. Some investors that already meet income
or net worth criteria may find it is easier or less costly to
demonstrate their accredited investor status under Rule 501(a)(10).
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However, these investment options generally come without the
additional disclosure provided by registration under the Securities Act
and could entail greater costs related to illiquidity,\70\ agency costs
(i.e., costs arising from conflicts of interest between investors and
managers), adverse selection, and business risk, as compared to
investments in the public capital markets. Individual investors'
comprehension and sophistication in the areas of securities and
investing, and knowledge and experience in financial and business
matters, as reflected in having a professional certification or
designation or credential under Rule 501(a)(10), increases the
likelihood that such individual investors would be capable of
evaluating the merits and risks of a prospective investment in an
exempt offering and managing such risks. For example, such individuals
may be more likely to consider the size of any single investment
relative to their overall portfolio and diversify their portfolio.\71\
It is unclear whether additional investment opportunities would improve
portfolio efficiency for newly eligible accredited investors.
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\70\ While securities sold in an exempt offering are generally
illiquid, the introduction of a larger pool of investors that become
eligible as accredited investors through the exams could potentially
(at the margin) create impetus for additional secondary market
liquidity in these securities. In addition, the expansion of the
accredited investor pool also would potentially increase the
feasibility of resales under section 4(a)(7) of the Securities Act
[15 U.S.C. 77d(a)(7)]. However, if some newly eligible investors
have fewer financial resources (see infra note 71), they may be less
willing to hold restricted securities over long holding periods, and
especially, seek to unload positions during downturns.
\71\ As stated in the Accredited Investor Adopting Release,
while certain of these individuals may have fewer financial
resources and, as a result, be less able to bear the financial risk
of private investments, we believe their professional credentials
and experience should enable these investors to assess investment
opportunities, appropriately allocate capital based on their
individual circumstances, including whether to reallocate investment
capital between private investments and other equivalent-sized
investments, and otherwise make appropriately informed decisions
regarding their financial interests, including their ability to bear
the financial risk. See Accredited Investor Adopting Release at
64241.
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While individuals incur costs to prepare for and take the Series 79
Exam or Series 86 and 87 Exams, and obtain and maintain an active FINRA
license in good standing, we do not expect there to be incremental
costs of these licenses being designated as an accredited investor
credential under Rule 501(a)(10), since we expect individuals to
continue to pursue and maintain these licenses chiefly for professional
purposes, rather than to qualify as accredited investors.\72\
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\72\ A candidate must be associated with and sponsored by a
FINRA member or other applicable self-regulatory member firm, prior
to applying for the Series 79 or the Series 86 and 87. See supra
section II.A.2.
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The described effects, including both the benefits and the costs to
issuers and investors, may be modest in magnitude, as discussed in
detail in the Accredited Investor Adopting Release. First, it is
possible that a number of the individuals who would qualify as
accredited investors under the potential designation may already
qualify as accredited investors based on one or more of the criteria in
Rule 501(a).\73\ Second, because any newly eligible individuals may
have income and net worth below the currently required thresholds for
individual accredited investors, the increase in the capital supply
from an individual newly eligible accredited investor would likely be
low, and the collective impact would depend on the size of any increase
in the number of individual accredited investors.\74\ Third, the
effects may be more modest to the extent that some of the newly
eligible natural persons may end up not participating in exempt
[[Page 63365]]
offerings.\75\ Fourth, it is possible that issuers may choose to offer
securities to institutional accredited investors, or apply investment
minimums (perhaps in an effort to simplify their capitalization table),
such that any individual accredited investors participating in exempt
offerings are more likely to be those who meet the net worth or income
criteria in Rule 501(a). Fifth, any specific effects of this potential
change to the accredited investor pool would be partly diluted to the
extent that other Commission actions designating other credentials
result in expanding the pool of natural persons qualifying as
accredited investors based on multiple criteria.
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\73\ See Accredited Investor Adopting Release at 64262.
\74\ Id.
\75\ See, e.g., Katherine Carman et al., Exploring Accredited
Investors and Private Market Securities Ownership 18 tbl. 6 (OIAD,
Working Paper No. 1, June 2025), available at <a href="https://www.sec.gov/files/exploring-accredited-investors-june-2025.pdf">https://www.sec.gov/files/exploring-accredited-investors-june-2025.pdf</a> (reporting, based
on a recent investor survey, that, 14.4% of accredited investors and
4.7% of non-accredited investors, respectively, indicate interest in
investing in new or private companies, and that 4.3% of accredited
investors and 1.1% of non-accredited investors, respectively, report
owning a ``private fund or offering''). See also Katherine Carman &
Alycia Chin, Accredited Investors in the U.S. Population, 9 Fin.
Plan. Rev. e70023 (2026).
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III. Notice
For the reasons set forth herein, we believe that a holder of a
Series 79 or Series 86 and 87 would meet the requirements set forth in
Rule 501(a)(10). Accordingly, we believe it is appropriate to designate
holding the Series 79 and holding the Series 86 and 87 as qualifying
natural persons for accredited investor status pursuant to Rule
501(a)(10). We are issuing this notice and providing an opportunity for
public comment on such potential designations. We are particularly
interested in comments on whether we should designate holding a Series
79 or holding a Series 86 and 87 as qualifying natural persons for
accredited investor status pursuant to Rule 501(a)(10), as discussed in
this notice, and whether such designation could raise investor
protection concerns unique to persons who would be qualified under such
designation.
By the Commission.
Dated: September 30, 2026.
Vanessa A. Countryman,
Secretary.
[FR Doc. 2026-20307 Filed 10-2-26; 8:45 am]
BILLING CODE 8011-01-P
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