Notice2026-20310
Potential Designation of Passage of an Accredited Investor Exam To Be Developed by FINRA 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 passage of an accredited investor exam (the "Exam") to be developed by the Financial Industry Regulatory Authority, Inc. ("FINRA") as 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 63335-63344]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-20310]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 33-11445; File No. 4-931]
Potential Designation of Passage of an Accredited Investor Exam
To Be Developed by FINRA 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
[[Page 63336]]
passage of an accredited investor exam (the ``Exam'') to be developed
by the Financial Industry Regulatory Authority, Inc. (``FINRA'') as
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/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#1b696e777e36787476767e756f685b687e78357c746d"><span class="__cf_email__" data-cfemail="0173746d642c626e6c6c646f7572417264622f666e77">[email protected]</span></a>. Please include
file number 4-931 on the subject line.
Paper Comments
<bullet> Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number 4-931. 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/4-931">https://www.sec.gov/rules-regulations/public-comments/4-931</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
[[Page 63337]]
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 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 Designation
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 develop an accredited investor exam that could serve
as a means to qualify individuals as accredited investors, though it
did not propose to recognize such a test at that time.\22\ Many of the
commenters responding to the Accredited Investor Proposing Release's
request for comment on an accredited investor exam supported such an
exam.\23\ One of
[[Page 63338]]
these commenters recommended ``FINRA establish an examination that
would enable an individual to become an accredited investor,'' stating
that ``FINRA is well positioned to create and administer an examination
it believes appropriate to ensure an individual has the ability to
operate as a sophisticated investor'' and that ``[s]uch an avenue may
make a material difference in democratizing ownership.'' \24\ Other
commenters opposed the Series 7, 65, and 82 exams being used as a means
for an individual to be an accredited investor and indicated a
preference for a specific accredited investor exam.\25\
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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 Tron Black (Nov. 20, 2019, last
updated Dec. 24, 2019) (``T. Black'') (recommending an accredited
investor exam that includes specific topics such as valuation, due
diligence, liquidity, shareholder rights, and accounting matters,
and that test takers should ``understand and acknowledge that they
bear the risk of loss for their own investment choices--absent
outright fraud''); letter from Blake Delaplane (Jan. 13, 2020)
(recommending an SEC-issued accredited investor exam paired with
investment limits); letter from Crowdwise, LLC (Mar. 1, 2020)
(``Crowdwise'') (recommending the SIE Exam as an initial
qualification exam until a specific accredited investor exam is
developed and administered, but noting that the SIE Exam leaves
investors ``with a lack of practical understanding for private
market investing''); letter from Tony Sparks (Jan. 2, 2020)
(supporting an accredited investor exam because ``it's wise for
people to be somewhat informed on how investments work before they
invest''); letter from Bruce A. Wallick (Dec. 19, 2019) (``B.
Wallick'') (stating that ``[w]hat's really needed to evaluate
various investments and avoid endangering one's wealth is adequate
analytical skill . . . . [p]erhaps requiring some case study
investment analysis as part of the test would be sufficient to
determine level of understanding''); letter from the Maryland State
Bar Association (Mar. 16, 2020) (noting that ``[w]ith respect to
persons who believe that they have the requisite sophistication,
knowledge, and experience such that they should qualify as
accredited investors, we believe that an accredited investor
examination to determine investor sophistication . . . would be a
much better way to address this issue''); letter from Carta, Inc.
(Mar. 16, 2020) (``Carta''); letter from David R. Burton (May 1,
2020) (``D. Burton''). 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>.
\24\ Letter from Carta. See also letter from D. Burton
(``Ordinary people outside of the financial industry should have a
means to prove that they have the knowledge and sophistication to
qualify. Such a test would be central to democratizing access to
Regulation D investments and enabling people who have developed the
requisite knowledge to have access to these investments.'').
\25\ See letter from Einar Vollset (Dec. 18, 2019) (stating that
``[r]equiring highly expensive and specialized professional
certifications such as Series 7, 65 or 82 is completely pointless
exercise'' and proposing ``a basic exam proving an understanding of
the risks involved'' and opposing the Series 7, 65, or 82 exams);
letter from Al Hemmingsen (Dec. 29, 2019) (stating that ``[t]he
usage of FINRA examinations associated with the Series 7, 65 and 82
is problematic'' and suggesting that an accredited investor exam
should be more rigorous than the Series 7, 65 and 82 exams).
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Other commenters were not supportive of designating an accredited
investor examination. One commenter stated that ``no special Accredited
Investor examination is needed . . . as long as one could take the
[Securities Industry Essentials] or Series 65 [exams].'' \26\ Another
commenter suggested that ``[f]or the immediate future . . . the SEC
only accept FINRA administered examinations as FINRA is subject to SEC
oversight and has existing mechanisms for making examination-related
information publicly available.'' \27\ In addition, two commenters
suggested that the Commission's proposals to add professional
certifications or designations to the accredited investor definition
should also require professional experience.\28\
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\26\ Letter from James J. Angel (Mar. 3, 2020).
\27\ Letter from G. Philip Rutledge (Jan. 31, 2020). This
commenter also questioned whether ``if one passes a SEC accredited
investor examination, is that individual deemed an accredited
investor forever or for a specified period of time after which the
individual may have to re-take the examination?'' Id.
\28\ See letter the North American Securities Administrators
Association (Mar. 16, 2020) (``NASAA'') (``[A]ny use of a
professional designation or exam as one aspect of a more fulsome
assessment of financial sophistication for purposes of determining
accredited investor status should also include significant relevant
experience.''); letter from Nasdaq, Inc. (May 18, 2020) (``An
examination of knowledge, without an additional requirement of
industry experience, is not a satisfactory means to determine
whether an investor can bear the risk of and evaluate a potential
investment in an exempt offering without the benefit of a
registration statement or similar disclosure.''). See also letter
from Mona DeFrawi (July 31, 2026), available at <a href="https://www.sec.gov/comments/4-892/4892-3054366.pdf">https://www.sec.gov/comments/4-892/4892-3054366.pdf</a> (stating that the Commission should
``[e]volve the accredited investor definition via a credential-based
exam pathway that qualifies retail investors by demonstrated
competence rather than net worth alone'').
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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 status.\29\ 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.'' \30\
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\29\ 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 NASAA 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)].
\30\ Accredited Investor Adopting Release at 64243.
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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).\31\ 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,\32\ have close ties to
the issuer,\33\ or have certain jobs in the
[[Page 63339]]
financial industry.\34\ In particular, the Commission has received
recommendations to expand the definition of accredited investors to
include those who pass an accredited investor exam.\35\ The Commission
has also received petitions for rulemaking requesting changes to the
accredited investor definition.\36\
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\31\ See, e.g., Report on the 45th Annual Small Business Forum
(July 27, 2026) (``2026 Small Business Forum Report'') 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) (``2025 Small Business Forum Report'') 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 (``SBCFAC'')
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 (``IAC'')
Recommendation regarding Retail Investor Access to Private Market
Assets (Sept. 18, 2025) (``2025 IAC Accredited Investor
Recommendation''), 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).
\32\ See, e.g., letter from 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 T. Black.
\33\ See, e.g., letter from B. Wallick (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.
\34\ See, e.g., letter from Crowdwise (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).'').
\35\ See, e.g., SBCFAC Recommendation regarding Entrepreneurial
Ecosystems (Nov. 16, 2022), available at <a href="https://www.sec.gov/spotlight/sbcfac/entrepreneurial-ecosystems-recommendation-101322.pdf">https://www.sec.gov/spotlight/sbcfac/entrepreneurial-ecosystems-recommendation-101322.pdf</a> (recommending ``provid[ing] alternative methods for
investors to qualify as sophisticated, which could include . . .
tests to demonstrate sophistication''); SBCFAC Recommendation
regarding Accredited Investor (Mar. 12, 2022), available at <a href="https://www.sec.gov/spotlight/sbcfac/sbcfac-accredited-investor-recommendation-021022.pdf">https://www.sec.gov/spotlight/sbcfac/sbcfac-accredited-investor-recommendation-021022.pdf</a>; 2026 Small Business Forum Report at 17
(recommending the Commission ``[e]xpand the accredited investor
definition to include additional measures of sophistication,
including through an investor test and experience''); 2025 Small
Business Forum Report at 18; Report on the 43rd Annual Small
Business Forum (Sept. 19, 2024) at 11, available at <a href="https://www.sec.gov/files/2024-oasb-annual-forum-report.pdf">https://www.sec.gov/files/2024-oasb-annual-forum-report.pdf</a>; Report on the
40th Annual Small Business Forum (Sept. 27, 2021) at 16, available
at <a href="https://www.sec.gov/files/2021_OASB_Annual_Forum_Report_FINAL_508.pdf">https://www.sec.gov/files/2021_OASB_Annual_Forum_Report_FINAL_508.pdf</a>. See also 2025 IAC
Accredited Investor Recommendation (supporting, in principle, ``the
notion of creating an accredited investor test,'' and stating that
``the Commission could delegate administration of the test to
FINRA'' and separately suggesting certain existing certifications it
believed ``could be appropriate'' for the Commission to designate
under Rule 501(a)(10)).
\36\ 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 38.
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In addition, legislation in Congress has been introduced to amend
the accredited investor definition to include natural persons who are
certified through an accredited investor exam.\37\
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\37\ See, e.g., Incentivizing New Ventures and Economic Strength
Through Capital Formation Act of 2025 (INVEST Act of 2025), H.R.
3383, 119th Cong. (2025) (as passed by the House of Representatives,
Dec. 11, 2025) (``INVEST Act'') (which would require that any such
test include the following investment criteria: ``(i) the different
types of securities; (ii) the disclosure requirements under the
securities laws . . . ; (iii) corporate governance; (iv) financial
statements and components of such statements; (v) aspects of
unregistered securities, securities issued by private companies and
investments into private funds . . .; (vi) potential conflicts of
interest . . . ; and (vii) such other criteria as the Commission
determines necessary or appropriate in the public interest or for
the protection of investors''); Empowering Main Street in America
Act of 2024, S.5139, 118th Cong. (2024) (as introduced to the S.
Comm. on Banking, Hous. and Urb. Affairs, Sept. 23, 2024) (which
would amend the accredited investor definition under section
2(a)(15) of the Securities Act [15 U.S.C. 77b(a)(15)] to include
natural persons who are certified through an accredited investor
exam established or approved by the Commission, a State securities
commission, or a self-regulatory organization). But see Letter to
the House of Representatives from NASAA (Dec. 10, 2025), available
at <a href="https://www.nasaa.org/wp-content/uploads/2025/12/NASAA-Urges-Congress-to-Oppose-the-INVEST-Act-As-Written-12.10.25-F.pdf">https://www.nasaa.org/wp-content/uploads/2025/12/NASAA-Urges-Congress-to-Oppose-the-INVEST-Act-As-Written-12.10.25-F.pdf</a>
(responding to the INVEST Act, stating that ``[a]s for an accredited
investor exam, NASAA would prefer an exam that tests relevant
knowledge coupled with practical experience. NASAA would not endorse
a test that does not meaningfully probe the investor's financial
sophistication and ability to understand the information asymmetry
and other risks posed by private market investing.'') (last
retrieved Sept. 24, 2026).
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Commission staff and FINRA staff have discussed the possibility of
FINRA developing an exam to qualify natural persons for accredited
investor status. FINRA staff have formulated initial plans for the
Exam, which has been informed by feedback from Commission staff, and is
ready to proceed with the next stages of development.
For the reasons set forth in section II, based on our understanding
of how FINRA intends to design and implement the Exam, we believe that
receiving a passing score on the Exam would satisfy the standard in
Rule 501(a)(10).\38\ Accordingly, as required by Rule 501(a)(10), we
are providing notice and an opportunity for public comment on potential
designation of passage of the Exam as qualifying natural persons for
accredited investor status.\39\
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\38\ 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: holding a license as a U.S. certified
public accountant in good standing; holding a charter as a Chartered
Financial Analyst in good standing; holding a certification as a
Certified Financial Planner in the United States in good standing;
and the Investment Banking Representative license (Series 79) and
the Research Analyst license (Series 86 and Series 87). See
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; 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
published elsewhere in this issue of the Federal Register.
\39\ The description of the Exam that follows is based on
Commission staff's discussions with FINRA staff. Any discussion in
this notice that FINRA ``intends,'' ``indicates,'' ``anticipates,''
or ``believes'' is based on what FINRA staff has communicated to the
Commission staff. Similarly, any discussion in the notice that the
Exam or Exam Holder ``will'' or ``would'' have certain
characteristics should be read to refer to what FINRA currently
anticipates or intends as of the date of this notice. As is the case
for the other prongs of the accredited investor definition, Exam
Holders 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. Exam Requirements
1. Background
FINRA intends to create an Exam to assess a candidate's
comprehension and sophistication in the areas of securities and
investing, including if the candidate has sufficient knowledge and
experience in financial and business matters to evaluate the merits and
risks of a prospective investment. FINRA is developing the Exam
specifically as an accredited investor exam that is intended to satisfy
the requirements of Rule 501(a)(10).
The format, administration, and policies and procedures of the Exam
would be largely modeled on the Securities Industry Essentials Exam
(``SIE Exam''), an existing FINRA exam for prospective securities
industry professionals that assesses a candidate's knowledge of basic
securities industry information.\40\ Modeling the format,
[[Page 63340]]
administration, and policies and procedures of the Exam on the existing
SIE Exam will allow the general public to more easily understand the
logistics of the Exam and will streamline the process for developing
the Exam, due to the currently available information about, and market
familiarity with, the policies and procedures for the SIE Exam.
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\40\ 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>
(stating that ``[p]assing the SIE is the first step toward a career
in the securities industry. The next step is becoming associated
with a FINRA member firm and taking one of the [Series 6, Series 7,
Series 22, Series 57, Series 79, Series 82, Series 86 and 87, or
Series 99] exams'') (last retrieved Sept. 24, 2026); FINRA,
Securities Industry Essentials (SIE) Examination Content Outline
(``SIE Exam Content Outline''), available at <a href="https://www.finra.org/sites/default/files/2025-10/SIE_Content_Outline.pdf">https://www.finra.org/sites/default/files/2025-10/SIE_Content_Outline.pdf</a> (providing
further details on the structure and administration of the SIE Exam,
as well as a detailed content outline) (last retrieved Sept. 24,
2026); FINRA, SIE Exam and Exam Restructuring Frequently Asked
Questions (FAQ), available at <a href="https://www.finra.org/registration-exams-ce/qualification-exams/sie-and-exam-restructuring-faq">https://www.finra.org/registration-exams-ce/qualification-exams/sie-and-exam-restructuring-faq</a>
(providing information on SIE Exam enrollment, eligibility, scoring
and other matters) (last retrieved Sept. 24, 2026). See also FINRA,
Frequently Asked Questions about the Test Enrollment Services System
(TESS) (``FINRA Test Enrollment Services System FAQs''), available
at <a href="https://www.finra.org/registration-exams-ce/qualification-exams/securities-industry-essentials-exam/tess-faq">https://www.finra.org/registration-exams-ce/qualification-exams/securities-industry-essentials-exam/tess-faq</a> (providing details on
creating an account and enrolling for the SIE Exam) (last retrieved
Sept. 24, 2026).
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As explained in section II.B, we believe designating individuals
who pass the Exam and who are within the Exam's ten-year validity
period (``Exam Holders'') as accredited investors would be consistent
with the standard in Rule 501(a)(10) because such status would 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.\41\
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\41\ See section II.A.4.v for a discussion of the ten-year
validity period.
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2. Eligibility To Take the Exam
The Exam would be open to anyone age 18 years or older. Association
with a FINRA member firm would not be required to take the Exam.
Passing the Exam by itself would not qualify an individual for
registration with a FINRA member firm or to engage in securities
business under FINRA rules.
3. Exam Content and Format
The Exam would be designed to assess candidates' knowledge,
comprehension, and skills covering the following securities and
investing topics: \42\
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\42\ The competencies included in the contemplated Exam sections
are similar to those in the INVEST Act. See supra note 37.
Table 1--Exam Contemplated Sections and Content Weightings
------------------------------------------------------------------------
Contemplated
Contemplated sections weightings of
exam items (%)
------------------------------------------------------------------------
Definitions and Structures of Securities................ 13-20
Investment Risks........................................ 20-28
Disclosures and Regulatory Requirements................. 13-20
Financial Statements.................................... 11-19
Conflicts of Interest................................... 10-18
Corporate Governance.................................... 10-18
------------------------------------------------------------------------
The Definitions and Structures of Securities section would be
designed to test knowledge, comprehension, and skills with respect to
the types of securities and investment structures in exempt offerings
of securities under the Securities Act (e.g., offerings in reliance on
Regulation D, Regulation A, or Regulation Crowdfunding), and how such
offerings compare to offerings of securities registered under the
Securities Act. For example, this section would test candidates'
knowledge of the characteristics of, and the differences between,
different types of securities, such as equity securities (e.g., common
and preferred stock), debt securities (e.g., bonds), and Simple
Agreements for Future Equity (SAFEs).\43\ This section would also be
designed to test candidates' knowledge of different investment
structures, such as open-end and closed-end investment companies,
private funds, and trusts (such as real estate investment trusts or
REITs).
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\43\ A Simple Agreement for Future Equity (SAFE) is an agreement
between a company and an investor in which the company promises to
give the investor a future ownership interest in the company if
certain triggering events occur, such as a future equity financing
or an acquisition of the company.
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The Investment Risks section would be designed to test knowledge,
comprehension, and skills with respect to the risks associated with
exempt offerings. For example, this section would test candidates'
understanding of liquidity risks (e.g., resale restrictions, redemption
restrictions, and risks associated with potentially longer investment
horizons), issuer performance history (if any), concentration risks,
diversification as a risk mitigation strategy, investment specific
risks (e.g., dilution), the use of leverage and its potential to
amplify losses, and the impact of fees and expenses on net investment
returns.
The Disclosures and Regulatory Requirements section would be
designed to test knowledge, comprehension, and skills with respect to
disclosure concepts, the types of disclosures provided under different
regulatory regimes, and the regulatory requirements in exempt offerings
(particularly as compared to registered offerings). For example, this
section would test candidates' knowledge of disclosure concepts (such
as materiality and risk factors), required disclosures (or lack of
disclosure requirements) under different exemptions from registration
(e.g., offerings in reliance on Regulation D, Regulation A, or
Regulation Crowdfunding), initial disclosures versus ongoing
disclosures, regulatory requirements for issuers, and regulatory
requirements for intermediaries.
The Financial Statements section would be designed to test
knowledge, comprehension, and skills to understand different types of
financial statements, financial statement numeracy, and investment-
related ratios and metrics. For example, this section would test
candidates' knowledge of the different types of financial statements
(e.g., balance sheets and income statements), GAAP versus non-GAAP
financial measures, and valuation ratios and metrics (e.g., debt-to-
equity ratio, current ratio, internal rate of return, and bond
calculations such as yield to maturity).
The Conflicts of Interest section would be designed to test
knowledge, comprehension, and skills with respect to a variety of
conflicts investors may encounter in exempt offerings. For example,
this section would test candidates' understanding of issuer and
affiliate conflicts of interest, intermediary conflicts of interest,
insider conflicts of interest, and investor conflicts of interest (such
as tiered information access and other preferential treatment for
certain investors).
The Corporate Governance section would be designed to test
knowledge, comprehension and skills with respect to board, management,
and investor rights and obligations. For example, this section would
test candidates' knowledge of board and management fiduciary duties,
corporate structures (such as different legal entity types), corporate
documents (such as charters and by-laws), investor rights (such as
voting rights, information rights, tag-along rights, drag-along rights,
and rights of first refusal), and investor recourse or lack thereof
under applicable law.
The format of the Exam would be consistent with the SIE Exam. The
Exam would be administered in English. It is anticipated that the Exam
would consist of approximately 75 multiple-choice written
questions.\44\ Candidates would be allowed approximately 2 hours to
complete the Exam, consistent with the SIE Exam.\45\ Similar to other
FINRA exams, FINRA would designate a passing score ``based on a process
known as standard setting, which assesses a number of factors,
including
[[Page 63341]]
industry trends . . . and evaluations of content difficulty'' by a
committee of subject matter experts.\46\ The passing score for the Exam
would be set to reflect the minimum level of knowledge necessary for
candidates to reliably and validly demonstrate their comprehension and
sophistication in the areas of securities and investing such that the
candidate will reasonably be expected to have sufficient knowledge and
experience in financial and business matters to evaluate the merits and
risks of a prospective investment.\47\
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\44\ While the exact number of questions has not yet been
finalized, FINRA anticipates the Exam would have between 65-85
questions. Consistent with the SIE Exam, FINRA may include five to
ten additional, unidentified pretest questions that do not
contribute toward the candidate's score. See SIE Exam Content
Outline at 2.
\45\ See id.
\46\ Self-Regulatory Organizations; Financial Industry
Regulatory Authority, Inc.; Notice of Filing and Immediate
Effectiveness of a Proposed Change Relating to Provision of Test
Result Information to Candidates Who Pass a FINRA Qualification
Examination, Release No. 34-84376 (Oct. 5, 2018) [83 FR 51720, 51720
(Oct. 12, 2018)].
\47\ FINRA also intends to make adjustments to Exam candidate
test scores to account for slight variations in the difficulty that
may exist among different sets of Exam questions. This method allows
for a fair comparison of scores and helps ensure that every
candidate is held to the same passing standard regardless of which
set of Exam items they received.
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FINRA would engage in an ongoing review of the contents of the
Exam, and update the Exam as necessary, to reflect developments in
private and public offerings, as well as changes in applicable laws and
rules.
4. Administration and Delivery of the Exam
i. Administration and Enrollment
While FINRA would create and administer the Exam, FINRA intends to
have a third-party vendor deliver the Exam, consistent with the SIE
Exam.\48\ Detailed information about enrollment procedures, frequently
asked questions, and a content outline would be available on a
dedicated location on FINRA's website.
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\48\ A third-party vendor would handle the logistical aspects of
administration of the Exam, such as operation of the testing
facilities. See FINRA, Schedule an Exam (``SIE Exam Scheduling
Procedures''), available at <a href="https://www.finra.org/registration-exams-ce/qualification-exams/schedule-exam#request_online_sie">https://www.finra.org/registration-exams-ce/qualification-exams/schedule-exam#request_online_sie</a> (last
retrieved Sept. 24, 2026).
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Consistent with the SIE Exam, candidates would enroll for the Exam
by creating an account with FINRA and paying the Exam fee on a website
maintained by FINRA.\49\
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\49\ See FINRA Test Enrollment Services System FAQs.
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ii. Fees
It is anticipated that the Exam fee would be similar to the SIE
Exam fee, which is currently $100.\50\ As a not-for-profit self-
regulatory organization, FINRA receives no taxpayer funding and
accordingly would rely on fees to offset the costs of creating,
administering, maintaining, and paying for the delivery of the
Exam.\51\ Generally, exams that are administered by FINRA more
frequently or are longer in duration typically require more effort and
cost to develop, maintain, and update.\52\ The Commission also
extensively supervises FINRA, among other things, with rules or fees
proposed by FINRA subject to review by the Commission.\53\ Fees for the
Exam would take into account direct costs for the Exam (such as Exam
development and operating expenses) and indirect costs for the
Exam.\54\
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\50\ See SIE Exam Overview.
\51\ See Self-Regulatory Organizations; Financial Industry
Regulatory Authority, Inc.; Notice of Filing and Immediate
Effectiveness of a Proposed Rule Change to Adjust FINRA Fees to
Provide Sustainable Funding for FINRA's Regulatory Mission, Release
No. 34-101696 (Nov. 21, 2024) [89 FR 93709, 93709 (Nov. 27, 2024)]
(``2024 FINRA Fee Adjustment Release'').
\52\ See 2024 FINRA Fee Adjustment Release at 93719.
\53\ See, e.g., 2024 FINRA Fee Adjustment Release at 93725
(revising, among other fees, the fees for FINRA's existing
qualification examinations). FINRA is also required to comply with
section 15A(b)(5) of the Exchange Act [15 U.S.C. 78o-3(b)(5)] which
requires, among other things, that FINRA rules provide for the
equitable allocation of reasonable dues, fees, and other charges
among members and issuers and other persons using any facility or
system that FINRA operates or controls. The Commission's Division of
Examinations also conducts examinations of FINRA through its FINRA
and Securities Industry Oversight (FSIO) Examination Program.
\54\ See generally 2024 FINRA Fee Adjustment Release at 93709-
93710; Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change to Adjust FINRA Fees to Provide Sustainable
Funding for FINRA's Regulatory Mission, Release No. 34-90176 (Oct.
14, 2020) [85 FR 66592, n.14 (Oct. 20, 2020)].
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iii. Scheduling an Exam
After a candidate is enrolled to take the Exam, FINRA intends to
provide a 120-day window in which the Exam must be taken.\55\ The Exam
would be available in-person only.\56\ Most test centers are open at
least five days a week (except for major holidays) and candidates would
be able to schedule a time within that 120-day window based on
appointment availability. FINRA expects that 95% of potential United
States test-takers would be within 60 miles of an in-person test
center.\57\
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\55\ FINRA anticipates this 120-day window would start the day
following successful enrollment, and if the candidate does not take
the Exam within that window, then the candidate would forfeit
payment of Exam fees and would need to reschedule and pay the Exam
fee. This 120-day window and forfeiture process would be consistent
with the SIE Exam. See SIE Exam Scheduling Procedures.
\56\ As with FINRA's existing exams, the Exam would be designed
to comply with the Americans with Disabilities Act [Public Law 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 intends to provide such testing
accommodations in a manner consistent with its existing exams. See
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).
\57\ FINRA also intends for the Exam to be available in select
international locations.
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iv. Rules of Conduct
Candidates would be subject to FINRA rules of conduct regarding
cheating, confidentiality, and other matters in a manner generally
consistent with the SIE Exam and other FINRA qualification exams.\58\
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\58\ See, e.g., FINRA Rule 1210 Supplementary Material .05
(describing consequences of violating FINRA qualification exam rules
of conduct).
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v. Results, Validity, and Retake Procedures
FINRA intends to notify candidates of whether they passed the Exam
and provide candidates with test results shortly after completion of
the Exam, in a manner consistent with the SIE Exam.\59\
---------------------------------------------------------------------------
\59\ See FINRA, Prepare for Your Test Center Appointment,
available at <a href="https://www.finra.org/registration-exams-ce/qualification-exam/testcenter#results">https://www.finra.org/registration-exams-ce/qualification-exam/testcenter#results</a> (last retrieved Sept. 24,
2026).
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It is anticipated that the Exam would be valid for ten years from
the date that a candidate passes the Exam. Individuals would have to
retake the Exam and pass it again in order to remain an accredited
investor in reliance on their status as an Exam Holder and it is not
anticipated that FINRA would consider any waivers.
The ten-year renewal frequency would help ensure that individual
investors' knowledge remains up-to-date while mitigating the costs to
those investors of taking the Exam. A shorter period would increase
costs for individuals that seek to establish accredited investor status
by using this Exam, while a longer period could allow the individual's
financial knowledge to become stale or obsolete without testing.
If a candidate does not pass the Exam, the retake process would be
similar to the process for the SIE Exam. Any person who fails to pass
the Exam would be permitted to take the Exam again after a period of 30
calendar days has elapsed from the date of such person's last attempt
to pass that Exam, except that any person who fails to pass the Exam
three or more times in succession within a two-year period would be
prohibited from again taking the Exam until a period of 180 calendar
days has elapsed from the date of such
[[Page 63342]]
person's last attempt to pass the Exam.\60\ The Exam fee would need to
be paid each time a candidate takes the Exam.
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\60\ See FINRA Rule 1210 Supplementary Material .06. FINRA
recently filed with the SEC a proposed rule change to amend FINRA
Rule 1210 to reduce the waiting periods for retaking FINRA
Qualification examinations to 15 and 60 calendar days (from 30 and
180 calendar days, respectively). See SR-FINRA-2026-014, Proposed
Rule Change to Amend FINRA Rule 1210 (Registration Requirements),
available at <a href="https://www.finra.org/rules-guidance/rule-filings/sr-finra-2026-014">https://www.finra.org/rules-guidance/rule-filings/sr-finra-2026-014</a> (last retrieved Sept. 24, 2026). FINRA anticipates
such reductions would also apply to the retake periods for the Exam,
if adopted.
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vi. Public Verification
For people who pass the Exam, FINRA would develop a process where
issuers or others would be able to independently verify the status of
Exam Holders (together with the passage date of the Exam and date the
ten-year validity period ends) in a manner that is compliant with Rule
501(a)(10)(iv).
B. Rationale for Designation
1. Rule 501(a)(10) Generally and Rule 501(a)(10)(i)
Based on our understanding of how FINRA intends to design and
implement the Exam, we believe it would be appropriate to designate
Exam Holders as qualifying for accredited investor status pursuant to
Rule 501(a)(10). The Exam would provide an additional knowledge-based
means for individuals to qualify as accredited investors while
appropriately balancing investor protection concerns.\61\ The Exam, as
currently intended to be designed and implemented by FINRA, would
fulfill the non-exclusive list of attributes enumerated in Rule
501(a)(10) and allow investors to demonstrate comprehension and
sophistication in the areas of securities and investing without needing
to establish their wealth, their income, or that they satisfy the other
prongs of the existing accredited investor definition.
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\61\ 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.''
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.\62\ We believe
that passage of the Exam and the ten-year validity period are an
appropriate measure of good standing. The requirement to periodically
retake the Exam would ensure that investors continue to have the
requisite financial sophistication to qualify as accredited investors.
In particular, this requirement would help ensure that individuals who
previously passed the Exam continue to stay apprised of important
developments in the areas of securities, investing, and financial and
business matters as they develop and change over time.
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\62\ See supra note 19.
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As we stated in the Accredited Investor Adopting Release,
individuals holding qualifying credentials under Rule 501(a)(10) need
not practice in the fields related to the certifications or
designations, and therefore passage of the Exam with a ten-year
validity period would be sufficient to demonstrate a candidate's
financial sophistication, even when the Exam Holder is not practicing
in an area related to the certification or designation.\63\
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\63\ See Accredited Investor Adopting Release at 64242.
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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.4, FINRA, a self-
regulatory organization registered with the Commission,\64\ would
create and administer the Exam, with delivery by a third-party vendor.
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\64\ 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 ``[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 an exam designed to satisfy the
objectives of Rule 501(a)(10)(ii), such as the Exam described in
section II.A, would also satisfy the objectives of Rule
501(a)(10)(iii). A person that demonstrates comprehension and
sophistication in the areas of securities and investing through the
passage of such Exam 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.
As described in more detail in section II.A.3, the Exam would be
specifically designed to evaluate a person's comprehension and
sophistication in the areas of securities and investing. We believe the
Exam would achieve this objective, as the topics FINRA intends to test
on the Exam are specifically tailored to testing the candidates'
financial sophistication. The Exam's Definitions and Structures of
Securities section would assess knowledge, comprehension, and skills
with respect to the types of securities and investment structures in
exempt offerings of securities under the Securities Act and how such
offerings compare to offerings of securities registered under the
Securities Act. The Exam's Investment Risks section would assess
candidates' understanding of the merits and risks of investing in
exempt offerings (including as compared to registered offerings).
Additionally, other sections of the Exam would also evaluate a person's
comprehension and sophistication with respect to legal and financial
issues around securities and investing, such as the Corporate
Governance section (which would test candidates' understanding of their
rights and obligations) and the Financial Statements section (which
would test candidates' understanding of financial statements, financial
statement numeracy, and investment-related ratios and metrics).
We believe that by passing the Exam, 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.\65\
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\65\ See Accredited Investor Adopting Release at 64241.
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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
[[Page 63343]]
in section II.A.4.v, FINRA intends to develop a process by which
issuers or others can independently verify the status of Exam Holders
in a manner that is compliant with Rule 501(a)(10)(iv).
C. Economic Considerations
As discussed above, we are considering whether to add Exam Holders
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 pass the Exam and
are within the ten-year validity period 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.\66\ The designation
of Exam Holders 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.\67\
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\66\ 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 Exam Holders as accredited investors
might have indirect economic effects.
\67\ 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 reliably
predict how many prospective investors will attempt, and pass, the
Exam, as well as information about how many of those that pass the Exam
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.\68\ Further, while individuals taking the Exam may
presumably be motivated by the potential qualification as an accredited
investor, it is unclear to what extent any newly eligible accredited
investors will choose to participate in exempt offerings after passing
the Exam.
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\68\ For instance, some existing investors that qualify as
accredited investors based on income or net worth may pursue the
Exam to facilitate the issuer's reasonable belief or reasonable
steps to verify requirements of Rule 506(b) and Rule 506(c). 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 38. Thus, by taking and passing the
Exam, this category of investors may not contribute to a meaningful
net expansion of the pool of accredited investors.
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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).\69\ This change may also benefit issuers in exempt
offerings by making it easier and less costly to find and verify
accredited investors (i.e., by reducing search costs).\70\ As discussed
in section II.A.4.vi, the status of an Exam Holder could be easily
independently verified, which would directly reduce issuers' costs of
confirming accredited investor eligibility, relative to verifying
income or net worth.\71\ 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.\72\ 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.\73\
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.\74\ 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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\69\ See Accredited Investor Adopting Release at 64264-65.
\70\ See Accredited Investor Adopting Release at 64264.
\71\ Thus, even if some Exam Holders already meet other
accredited investor eligibility criteria, the overall costs of
verification of accredited investor status may decrease with the
addition of the Exam option.
\72\ See 17 CFR 230.502(b).
\73\ See 17 CFR 230.506(c)(1) through 230.506(c)(2).
\74\ See 17 CFR 230.251(d)(2)(i)(C); 17 CFR 227.100(a)(2).
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For investors, the availability of the Exam 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.\75\
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\75\ As noted above, the extent of overlap between the Exam
Holders and the investors that meet the existing accredited investor
criteria is unclear. 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,\76\ agency costs
(i.e., costs
[[Page 63344]]
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.\77\ It is unclear whether additional
investment opportunities would improve portfolio efficiency for newly
eligible accredited investors.
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\76\ 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 Exam 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 77), they may be less
willing to hold restricted securities over long holding periods, and
especially, seek to unload positions during downturns.
\77\ 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 knowledge and
sophistication 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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Investors that elect to pursue the Exam will also incur some costs,
including the Exam fee (anticipated to be similar to the SIE Exam fee,
which is currently $100),\78\ the costs of travel to the Exam location,
and the costs of time to study and take the Exam; these costs are
expected to be incurred in connection with each initial Exam attempt,
any retakes if the initial Exam attempt is unsuccessful, as well as
renewal of the credential by retaking the Exam every ten years.
Investors are expected to incur those costs only if they perceive the
benefits of accredited investor status to exceed the costs.
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\78\ See supra note 55 (discussing rescheduling fees).
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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).\79\ 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.\80\ Third, although
the individuals taking the Exam may presumably be motivated by the
potential qualification as an accredited investor, the effects may be
more modest to the extent that some of the newly eligible natural
persons may end up not participating in exempt offerings.\81\ 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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\79\ See Accredited Investor Adopting Release at 64262.
\80\ Id.
\81\ 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 US Population, 9 Fin. Plan.
Rev. e70023 (2026).
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III. Notice
For the reasons set forth herein, we believe that passage of the
Exam, as it is currently intended to be designed and implemented by
FINRA, would meet the requirements set forth in Rule 501(a)(10).
Accordingly, we believe it is appropriate to designate Exam Holders as
qualifying for accredited investor status pursuant to Rule 501(a)(10).
We are issuing this notice and providing an opportunity for public
comment on such a potential designation. We are particularly interested
in comments on whether we should designate Exam Holders 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.
We are also interested in comments on the Exam itself (including
the scope and appropriateness of the content, format, administration,
result verification, fees, and validity period). We will share any such
comments with FINRA staff and take such comments into consideration
when determining whether to designate Exam Holders as accredited
investors.
By the Commission.
Dated: September 30, 2026.
Vanessa A. Countryman,
Secretary.
[FR Doc. 2026-20310 Filed 10-2-26; 8:45 am]
BILLING CODE 8011-01-P
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