Notice2026-20311
Potential Designation of Chartered Financial Analyst Designation 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 holding a charter as a Chartered Financial Analyst ("CFA") in good standing 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 63314-63322]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-20311]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 33-11447; File No. 4-933]
Potential Designation of Chartered Financial Analyst Designation
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 holding a charter as a Chartered Financial Analyst
(``CFA'') in good standing 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#bccec9d0d991dfd3d1d1d9d2c8cffccfd9df92dbd3ca"><span class="__cf_email__" data-cfemail="7b090e171e56181416161e150f083b081e18551c140d">[email protected]</span></a>. Please include
file number 4-933 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 4-933. To submit a comment
to more than one file, please refer to each
[[Page 63315]]
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/4-933">https://www.sec.gov/rules-regulations/public-comments/4-933</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 companies; \14\
plans established and maintained by a state, its political
subdivisions, or any agency or
[[Page 63316]]
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 designate CFAs \22\ as qualifying natural persons
for accredited investor status, but did not include them in the
proposed list of certifications or designations to be included in an
initial Commission order accompanying the final rule, if adopted.\23\
In response to the omission, the CFA Institute, which is a global, not-
for-profit professional association of CFAs that also awards the CFA
charter, recommended the inclusion of CFAs on the initial list of
professional certifications, designations, and credentials.\24\ The CFA
Institute stated ``[w]e believe that the CFA Charter demonstrates that
an investor has the requisite level of financial sophistication and
abilities to render the protections of the Securities Act unnecessary.
Therefore, the Commission should designate the CFA Charter as
qualifying for accredited investor status.'' \25\
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\22\ As used herein, a CFA refers to those persons that are
considered ``CFA Charterholders'' and eligible to use such
designation publicly.
\23\ 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'').
\24\ See letter from the CFA Institute (May 4, 2020) (``CFA
Institute 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>.
\25\ See letter from CFA Institute 2020 at n.8.
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In July 2026, the CFA Institute submitted another letter in support
of designating the CFA charter as qualifying individuals for accredited
investor status.\26\ In that letter, the CFA Institute specifically
noted ways in which it believed that the CFA charter would satisfy the
requirements of Rule 501(a)(10), including that ``[t]he CFA Program
curriculum and series of three exams . . . are designed to reliably and
validly demonstrate comprehension and sophistication of securities and
[[Page 63317]]
investing at a professional level''; ``[p]ersons obtaining the CFA
charter can reasonably be expected to have the knowledge and experience
in financial and business matters to evaluate the merits and risks of a
prospective investment''; and the ``CFA Institute offers the public
access to an online searchable Member Directory to verify whether an
individual (i) is a member in good standing of CFA Institute, (ii)
holds the CFA charter and (iii) the date when the individual earned the
charter.'' \27\
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\26\ See letter from the CFA Institute (July 26, 2026) (``CFA
Institute 2026''), available at <a href="https://www.sec.gov/comments/S7-25-19/s72519-974860-3046830.pdf">https://www.sec.gov/comments/S7-25-19/s72519-974860-3046830.pdf</a>.
\27\ See id.
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Other commenters also generally supported the inclusion of
CFAs.\28\ One of those commenters stated that holding a charter as a
CFA ``generally require[s] the mastery of a broader range of material
at a deeper level than the series 7 exam and, therefore better equip[s]
a person to evaluate investments.'' \29\ Another commenter stated
holding a charter as a CFA ``demonstrate[s] the same type[ ] of
financial sophistication as the Series 7, 65, or 82 licenses.'' \30\
One commenter stated that the exclusion of CFA ``unnecessarily limits
the definition [of ``accredited investor''] without providing an
investor protection benefit.'' \31\
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\28\ See e.g., letter from James J. Angel (Mar. 3, 2020); letter
from Artivest Holdings, Inc. (Apr. 22, 2020) (``Artivest''); letter
from American Association of Private Lenders (May 27, 2020); letter
from Association of Trust Organizations, Inc. (Apr. 15, 2020);
letter from Michael Bernstein (Dec. 19, 2019); letter from David R.
Burton (May 1, 2020) (``D. Burton''); letter from Carta, Inc. (Mar.
16, 2020); letters from CityVest (Jan. 6, 2020 and Jan. 7, 2020);
letter from Luke Denlinger (Dec. 22, 2019); letter from Fidelity
Investments (Mar. 16, 2020) (``Fidelity''); letter from Geraci LLP
(Mar. 9, 2020); letter from HLWG (Mar. 16, 2020); letter from the
Institute for Portfolio Alternatives (Mar. 16, 2020) (``IPA'');
letter from Kevin King (Jan. 23, 2020); letter from Chris Lakumb
(Dec. 18, 2019); letter from Mercer Advisors (Mar. 11, 2020); letter
from Adam Moehn (Mar. 8, 2020); letter from Alex Naegele (Jan. 9,
2020); letter from G. Philip Rutledge (Jan. 31, 2020); letter from
Ashley Wunderlich (Feb. 7, 2020); letter from Kurt Wunderlich (Feb.
7, 2020).
\29\ See letter from D. Burton.
\30\ See letter from Fidelity.
\31\ See letter from Artivest. See also letter from IPA
(similarly stating that the exclusion of CFAs ``would unnecessarily
limit the definition without commensurate investor benefit.'').
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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.\32\ 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.'' \33\
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\32\ The exams for the General Securities Representative license
(Series 7) and the Private Securities Offerings Representative
license (Series 82) are developed and administered by the Financial
Industry Regulatory Authority (``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)].
\33\ 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).\34\ 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,\35\ have close ties to
the issuer,\36\ or have certain jobs in the financial industry.\37\ The
Commission has also received petitions for rulemaking requesting
changes to the accredited investor definition.\38\
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\34\ See, e.g., Letter from CFA Institute 2026; 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, including the CFA).
\35\ 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 Tron Black (Nov. 20, 2019, last updated Dec. 24, 2019).
\36\ 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.
\37\ 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).'').
\38\ 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 39.
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For the reasons set forth in section II, we believe that holding a
charter as a CFA in good standing would satisfy the standard in Rule
501(a)(10).\39\
[[Page 63318]]
Accordingly, as required by Rule 501(a)(10), we are providing notice
and an opportunity for public comment on the potential designation of
holding a charter as a CFA in good standing as qualifying natural
persons for accredited investor status.\40\
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\39\ 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 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 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 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.
\40\ As is the case for the other prongs of the accredited
investor definition, individuals holding a CFA in good standing
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. CFA Requirements
1. Background
We believe designating the holding of a charter as a CFA in good
standing as qualifying natural persons for accredited investor status
would be consistent with the standard in Rule 501(a)(10) because such
status meets 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.
CFA charterholders are often professionals in the investment
industry--the CFA Institute states that they ``occupy a range of
investment decision-making roles including buy-side, sell-side, and
corporate and advisory positions.'' \41\ The CFA Institute also states
that ``[a]mong charterholders globally, the two top professions are
portfolio managers and investment analysts.'' \42\
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\41\ Letter from CFA Institute 2026 at 8.
\42\ Id. Other professions include private wealth manager/
financial adviser/financial planner, corporate finance/M&A analyst,
and risk analyst/manager. Id.
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In order to earn the CFA charter, a candidate must meet the
eligibility requirements related to education or work experience to
register and enroll in the CFA Program, pass all three levels of the
CFA exam (the ``Exam'') and meet the work experience requirements.\43\
The Exam tests CFA candidates' knowledge and skills related to
investment analysis, valuation, portfolio construction, and ethical
decision-making.\44\ The CFA Institute is the credentialing body
responsible for developing and scoring the Exam. The candidate must
also join the CFA Institute as a member and commit to abide by, and
annually reaffirm, their adherence to the CFA Institute Code of Ethics
and Standards of Professional Conduct.\45\ As of August 10, 2026, the
CFA Institute estimates that there are approximately 194,000 CFAs
worldwide.\46\
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\43\ See CFA Institute, CFA Program exam information, available
at <a href="https://www.cfainstitute.org/programs/cfa-program/exam">https://www.cfainstitute.org/programs/cfa-program/exam</a> (last
retrieved Sept. 24, 2026).
\44\ See letter from CFA Institute 2026.
\45\ See letter from CF Institute 2026.
\46\ See CFA Institute, Where do CFA charterholders work?,
available at <a href="https://www.cfainstitute.org/programs/cfa-program/careers/employers-list">https://www.cfainstitute.org/programs/cfa-program/careers/employers-list</a> (last retrieved Sept. 24, 2026). See also CFA
Institute 2026 (``We have nearly 200,000 members in 160 locations
around the world. The vast majority of our members (97%) are CFA
charterholders.'').
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2. Educational and Work Experience Requirements
In order to be eligible to enroll in the CFA Program and register
for the Exam, a candidate must either: (1) hold a bachelor's degree;
(2) be currently enrolled in a bachelor's degree program (if the
candidate is within 23 months of their graduation month); or (3) have
either 4,000 hours of qualified professional work experience or a
combination of professional work experience and higher education
totaling 4,000 hours.\47\ Further, in order to apply to hold a charter
as a CFA, in addition to having successfully passed the Exam, a
candidate must have a minimum of 4,000 qualified hours of experience
completed in a minimum of 36 months and such ``[q]ualified hours must
be directly related to the investment decision-making process or
producing a work product that informs or adds value to that process.''
\48\
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\47\ See CFA Institute, CFA Program, available at <a href="https://help.cfainstitute.org/s/article/Enrollment-Requirements?language=en_US">https://help.cfainstitute.org/s/article/Enrollment-Requirements?language=en_US</a> (noting ``Additional Requirements,''
including requiring candidates to sign statements of ``Professional
Conduct and Candidate Responsibility'' during registration and
having a valid passport) (last retrieved Sept. 24, 2026).
\48\ See letter from CFA Institute 2026 at 8.
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3. Exam
i. Contents
The Exam is composed of three separate exams, each of which a CFA
candidate must pass to be eligible to obtain a CFA:
<bullet> Over a four-hour and thirty-minute period, the Level I
exam tests knowledge and skills related to key terms, concepts, and
formulas that are the foundation of the investment industry through 180
questions on the 10 following topics: ethical and professional
standards; quantitative methods; economics; financial statement
analysis; corporate issuers; equity investments; fixed income;
derivatives; alternative investments; and portfolio management.\49\
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\49\ The 2026 potential weights for the topics range from five
percent to 20 percent, with four topics weighted a minimum of 11
percent (ethical and professional standards; financial statement
analysis; equity investments; and fixed income). See CFA Institute,
CFA Program Level I exam, available at <a href="https://www.cfainstitute.org/programs/cfa-program/candidate-resources/level-i-exam#topic-weights">https://www.cfainstitute.org/programs/cfa-program/candidate-resources/level-i-exam#topic-weights</a>
(last retrieved Sept. 24, 2026). The CFA slightly revised the Level
I topics for 2027, replacing ``corporate issuers'' with ``corporate
finance,'' ``equity investments'' with ``equities,'' and ``portfolio
management'' with ``portfolio construction.'' See id. The weights
for the topics also were adjusted for 2027, with a range of weights
from five percent to 15 percent. See id.
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<bullet> Over a four-hour and twenty-four-minute period, the Level
II exam tests knowledge and skills related to analyzing and evaluating
situations that draw upon the knowledge and skills tested by the Level
I exam through 88 multiple choice questions covering the same 10 topics
as the Level I exam.\50\
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\50\ The topics are weighted differently for the Level II exam,
with the potential weights ranging from five percent to 15 percent,
with five topics weighted a minimum of 10 percent (financial
statement analysis; equities; fixed income; portfolio construction;
and ethical and professional standards). See CFA Institute, CFA
Program Level II exam, available at <a href="https://www.cfainstitute.org/programs/cfa-program/candidate-resources/level-ii-exam">https://www.cfainstitute.org/programs/cfa-program/candidate-resources/level-ii-exam</a> (last
retrieved Sept. 24, 2026).
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<bullet> Over a four-hour and twenty-four-minute period, the Level
III exam tests knowledge and skills obtained from Levels I and II and
requires the application of such knowledge to real-world scenarios.\51\
For the Level III exam, candidates have the opportunity to select the
specialized pathway ``more directly related to their interests and
aspirations'' from one of the following: portfolio management, private
wealth, or private markets.\52\ Approximately 65 to 70 percent of the
Level III exam tests on a common core of knowledge, skills and ability
applicable to all three pathways.\53\ The remaining 30 to 35
[[Page 63319]]
percent of the Level III exam tests on knowledge and skills related to
the specialized pathway selected by the CFA candidate. Unlike the Level
I and Level II exams, the Level III exam includes essay questions, in
addition to multiple choice questions.\54\
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\51\ See CFA Institute, CFA Program Level III exam (``Level III
exam details''), available at <a href="https://www.cfainstitute.org/programs/cfa-program/candidate-resources/level-iii-exam">https://www.cfainstitute.org/programs/cfa-program/candidate-resources/level-iii-exam</a> (last retrieved Sept.
24, 2026).
\52\ See CFA Institute, Level III specialized pathways,
available at <a href="https://www.cfainstitute.org/programs/cfa-program/candidate-resources/level-iii-exam/specialized-pathways">https://www.cfainstitute.org/programs/cfa-program/candidate-resources/level-iii-exam/specialized-pathways</a> (stating
that the CFA Institute introduced the pathways ``recogniz[ing] there
is more we can do to prepare candidates for promotion or lateral
hiring into . . . [private markets and private wealth] job roles'')
(last retrieved Sept. 24, 2026).
\53\ The common core knowledge topics are: asset allocation;
portfolio construction; performance measurement; derivatives and
risk management; and ethical and professional standards. Id.
\54\ See Level III exam details. According to the CFA Institute,
``over the past five years, the average pass rate has been less than
50 percent,'' cumulatively, for each level of the Exam (Level II
pass rate of 46% for candidates who successfully passed Level I
(41%) Level III pass rate of 49% for candidates who successfully
passed Level II and who go on to sit for Level III). See letter from
CFA Institute 2026.
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In addition, in connection with each level of the Exam, a CFA
candidate is required to complete a ``Practical Skill Module,'' which
is designed to develop a CFA candidate's practical skills through
videos, multiple-choice questions, guided practice, and case
studies.\55\ Each Practical Skill Module is not scored and takes from
10 to 20 hours to complete. A different one must be completed with each
level of the Exam.
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\55\ The topics available vary by level. For the Level I exam,
they are financial modeling or python programming fundamentals. For
the Level II exam, they are python programming fundamentals; python,
data science, and artificial intelligence; or analyst skills. For
the Level III exam, they are specific to the specialized pathway
that the CFA candidate selected. See CFA Institute, Practical Skill
Modules, available at <a href="https://www.cfainstitute.org/programs/cfa-program/candidate-resources/practical-skills-modules">https://www.cfainstitute.org/programs/cfa-program/candidate-resources/practical-skills-modules</a> (last retrieved
Sept. 24, 2026).
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As part of the CFA Institute's development of the Exam, it annually
conducts a ``practice analysis process,'' to ``assess and update the
Candidate Body of Knowledge, which identifies knowledge, skills, and
abilities that investment professionals need to perform successfully
throughout their career.'' \56\
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\56\ CFA Institute, CFA Program practice analysis, available at
<a href="https://www.cfainstitute.org/programs/cfa-program/practice-analysis">https://www.cfainstitute.org/programs/cfa-program/practice-analysis</a>
(last retrieved Sept. 24, 2026). According to the CFA institute, the
``Candidate Body of Knowledge'' ``represents the core knowledge,
skills, and abilities (competencies) generally accepted and applied
by investment professionals globally.'' CFA Institute, Candidate
Body of Knowledge (CBOK), available at <a href="https://www.cfainstitute.org/programs/cfa-program/candidate-resources/cbok">https://www.cfainstitute.org/programs/cfa-program/candidate-resources/cbok</a> (last retrieved Sept.
24, 2026).
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ii. Administration of the Exam
The CFA candidate applies to take the Exam through the CFA
Institute. The current standard registration fee is $1,490 for each of
the Level I and Level II exams, and $1,590 for the Level III exam.\57\
The Exam is administered four times a year, in February, May, August,
and November, and may only be taken at certain designated testing
centers.\58\ Candidates may take up to two of the levels during a
calendar year, and the levels cannot be taken in consecutive
administration windows or within six months of each other.\59\
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\57\ See CFA Institute, CFA Program, available at <a href="https://www.cfainstitute.org/programs/cfa-program/dates-fees">https://www.cfainstitute.org/programs/cfa-program/dates-fees</a> (last retrieved
Sept. 24, 2026). In addition, to the extent that a CFA candidate
needs to reschedule, the fee is currently approximately $250.
\58\ See id.
\59\ See CFA Institute, CFA Exam Eligibility Policy, available
at <a href="https://www.cfainstitute.org/about/governance/policies/cfa-exam-eligibility-policy">https://www.cfainstitute.org/about/governance/policies/cfa-exam-eligibility-policy</a> (last retrieved Sept. 24, 2026). For example, a
candidate that fails the Feb. Exam would have to wait until at least
Aug. to re-take the Exam.
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4. Additional Requirements
To become CFAs, in addition to passing the Exam and having the
requisite work experience, candidates must become a ``charterholder''
member of the CFA Institute.\60\ This requirement includes, among other
things, submitting professional references to the CFA Institute.\61\
When applying for membership, individuals must also separately apply to
a local CFA society, which is a local chapter of the CFA Institute.\62\
CFAs are required to pay annual dues to the CFA Institute (currently
$299).\63\ Also, CFAs are required to annually make a ``Professional
Conduct Statement'' regarding their compliance with the CFA Institute
Code of Ethics and Standards of Professional Conduct.\64\
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\60\ The CFA Institute has three levels of membership:
``charterholder'' (``For distinguished individuals who have
demonstrated professional excellence by completing the CFA[supreg]
Program.''), ``professional'' (``For experienced investment industry
professionals who want to deepen their impact and stay current as
the industry evolves.''), and ``associate'' (``For early career
finance professionals who seek a foundation and access point into
the investment industry and community.''). See CFA Institute,
Compare membership types, available at <a href="https://www.cfainstitute.org/membership/types">https://www.cfainstitute.org/membership/types</a> (last retrieved Sept. 24, 2026).
\61\ See CFA Institute, How to become a CFA charterholder,
available at <a href="https://www.cfainstitute.org/programs/cfa-program/charter">https://www.cfainstitute.org/programs/cfa-program/charter</a> (requiring ``two professional references if one of them is
an active regular member of the local [CFA] society to which [the
candidate is] applying. If none are active members, [the candidate
will] need to submit three professional references.'') (last
retrieved Sept. 24, 2026).
\62\ See CFA Institute, Application resources, available at
<a href="https://www.cfainstitute.org/membership/types/application-resources">https://www.cfainstitute.org/membership/types/application-resources</a>
(``When applying for CFA Institute professional or charterholder
membership, you must apply to a local society. The selected society
will review your application, and you can choose whether to join
after approval . . . . [S]ociety membership is voluntary for CFA
Institute professional and charterholder members.'') (last retrieved
Sept. 24, 2026). See also CFA Institute, Find a CFA Society,
available at <a href="https://www.cfainstitute.org/membership/find-cfa-society#sortCriteria=%40titlebasic%20ascending">https://www.cfainstitute.org/membership/find-cfa-society#sortCriteria=%40titlebasic%20ascending</a> (last retrieved Sept.
24, 2026).
\63\ See CFA Institute, Charterholder membership, available at
<a href="https://www.cfainstitute.org/membership/types/charterholder">https://www.cfainstitute.org/membership/types/charterholder</a> (last
retrieved Sept. 24, 2026).
\64\ See CFA Institute, Code of Ethics and Standards of
Professional Conduct, available at <a href="https://www.cfainstitute.org/sites/default/files/-/media/documents/ethics-in-practice/code_of_ethics_and_standards_of_professional_conduct_2024.pdf">https://www.cfainstitute.org/sites/default/files/-/media/documents/ethics-in-practice/code_of_ethics_and_standards_of_professional_conduct_2024.pdf</a> (last
retrieved Sept. 24, 2026). The CFA Institute also encourages CFAs to
``earn at least 20 [professional learning] credits (including two
credits in the areas of Standards, Ethics, and Regulations)''
annually. See CFA Institute, Professional Learning Program,
available at <a href="https://www.cfainstitute.org/membership/benefits/professional-learning-program">https://www.cfainstitute.org/membership/benefits/professional-learning-program</a> (last retrieved Sept. 24, 2026). The
CFA Institute provides CFAs with professional learning resources on
a number of topics. See CFA Institute, Resources for professional
learning, available at <a href="https://www.cfainstitute.org/insights/professional-learning#sortCriteria=%40officialz32xdate%20descending">https://www.cfainstitute.org/insights/professional-learning#sortCriteria=%40officialz32xdate%20descending</a>
(last retrieved Sept. 24, 2026).
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5. Public Verification
The CFA Institute has a member directory website that allows the
public to search at no cost for current CFA Institute members and does
not include individuals whose CFA Institute membership has lapsed, been
suspended, or revoked.\65\
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\65\ See CFA Institute, Member Directory Search, available at
<a href="https://directory.cfainstitute.org/">https://directory.cfainstitute.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 holding a charter
as a CFA in good standing as qualifying an individual for accredited
investor status pursuant to Rule 501(a)(10). The addition of holding a
charter as a CFA in good standing as a designated professional
designation would provide an additional knowledge-based means for
individuals to qualify as accredited investors while appropriately
balancing investor protection concerns.\66\
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\66\ 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.\67\ We believe
that the standards set by the CFA Institute for CFAs to maintain their
CFA charter (annually pay dues and make the ``Professional Conduct
Statement'') are an appropriate measure of good standing; and
therefore, a person must maintain their CFA status to be considered in
good standing.
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\67\ See supra note 19.
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Rule 501(a)(10)(i) additionally requires that a designated
certification,
[[Page 63320]]
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 Exam, which is a prerequisite to
holding a charter as a CFA in good standing, is designed and
administered by the CFA Institute. Although ``other industry body'' is
not defined in Rule 501(a)(10), we believe that the CFA Institute is an
industry body as contemplated under Rule 501(a)(10) due to its role in
setting best practices for professionals in the fields of financial
analysis and investment management.\68\
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\68\ See CFA Institute, Our Purpose, available at <a href="https://www.cfainstitute.org/about/set-the-standard">https://www.cfainstitute.org/about/set-the-standard</a> (last retrieved Sept.
24, 2026).
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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 passage of the Exam satisfies the objectives of
Rule 501(a)(10)(ii). We further believe that passage of the Exam
combined with the satisfaction of the requirements to obtain a CFA
charter would satisfy the objectives of Rule 501(a)(10)(iii). As
described in more detail in section II.A.3.i, the topics covered by the
three levels of the Exam are designed to evaluate a person's knowledge
and skill in the areas of investment analysis and portfolio management.
Levels I and II test knowledge and situational application of various
terms, concepts, and formulas that are foundational to the investment
industry, including financial statement analysis, equity investments,
fixed income instruments, and portfolio management.\69\ The Level III
exam tests knowledge and skills applied to real-world scenarios, with
approximately 65 to 70 percent of the exam focused on testing asset
allocation, portfolio construction, performance measurement, and
derivatives and risk management.\70\ The remainder of the Level III
exam tests the CFA candidate's knowledge related to the specialized
pathway that they have selected, which includes pathways for private
wealth, private markets, and portfolio management. Additionally, in
connection with each of Level I, II, and III, the CFA candidate is
required to complete a ``Practice Skills Module,'' which, while not
scored, is required and intended to teach in-depth practical
application of specialized knowledge and skills.\71\
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\69\ See supra notes 49-50.
\70\ See supra note 53. The remainder of the Level III exam
tests the CFA candidate's knowledge related to the specialized
pathway that they have selected.
\71\ See supra note 55.
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As described in more detail in section II.A.2, in addition to the
passage of the Exam, in order to be eligible to obtain a CFA charter,
the CFA candidate must have the required work experience. We therefore
believe that in obtaining a CFA charter, which requires attaining and
demonstrating the knowledge and skills tested by the Exam, and
obtaining the required work experience, 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.\72\
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\72\ 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 in section II.A.5, the public
may use the website maintained by the CFA Institute to verify whether
an individual is a CFA in good standing.
C. Economic Considerations
As discussed above, we are considering whether to add holding a
charter as a CFA in good standing 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 designation 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.\73\ The designation of holders of charters as a CFA in good
standing 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.\74\
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\73\ 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.
\74\ 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
CFAs \75\ 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.\76\ Further, it is unclear to what extent
any newly eligible accredited investors will choose to participate in
exempt offerings.
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\75\ According to the CFA Institute, there are currently
approximately 194,000 CFAs worldwide. See supra note 46 and
accompanying text.
\76\ For instance, some investors that would qualify based on
holding a charter as a CFA in good standing 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 39. In that scenario, the CFA
category may not contribute to a meaningful net expansion of the
pool of accredited investors. According to the CFA Institute
website, the ``average salary'' of a CFA is $180,000. See Make the
Right Choice with the CFA Program, CFA Inst., <a href="https://www.cfainstitute.org/programs/cfa-program/careers/credential-comparison">https://www.cfainstitute.org/programs/cfa-program/careers/credential-comparison</a> (last retrieved Sept. 24, 2026). In its comment letter
from July 26, 2026, the CFA Institute cites total compensation
figures as well, including median total compensation of $185,000 for
global members and $250,000 for U.S. members, and a 25%-75% range of
$116,000-$305,000 for global members and $174,000-$399,000 for U.S.
members. The CFA Institute states that these data suggest that
``[t]he median member in the US would qualify as an accredited
investor based on the income threshold.''
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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).\77\ This change may also benefit issuers in exempt
offerings by
[[Page 63321]]
making it easier and less costly to find and verify accredited
investors (i.e., by reducing search costs).\78\ As discussed in section
II.A.5, the status as a CFA in good standing could be easily
independently verified, which would directly reduce issuers' costs of
confirming accredited investor eligibility, relative to verifying
income or net worth.\79\ 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.\80\ 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.\81\
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.\82\ 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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\77\ See Accredited Investor Adopting Release at 64264-65.
\78\ See Accredited Investor Adopting Release at 64264.
\79\ See supra note 65 and accompanying text. Thus, even if some
CFAs already meet other accredited investor eligibility criteria,
the overall costs of verification of accredited investor status may
decrease with the designation of this credential under Rule
501(a)(10).
\80\ See 17 CFR 230.502(b).
\81\ See 17 CFR 230.506(c)(1) through 230.506(c)(2).
\82\ See 17 CFR 230.251(d)(2)(i)(C); 17 CFR 227.100(a)(2).
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For investors, the designation of this credential 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.\83\
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\83\ As noted above, the extent of overlap between CFAs and the
investors that meet the existing accredited investor criteria is
unclear. CFAs 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,\84\ 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.\85\
It is unclear whether additional investment opportunities would improve
portfolio efficiency for newly eligible accredited investors.
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\84\ 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 holding a charter as a CFA
in good standing 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 85), they may be less willing to hold restricted
securities over long holding periods, and especially, seek to unload
positions during downturns.
\85\ 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 Exam, and
obtain and maintain a charter as a CFA in good standing, we do not
expect there to be incremental costs of a CFA in good standing being
designated as an accredited investor designation under Rule 501(a)(10),
since we expect individuals to continue to pursue and maintain the CFA
charter chiefly for professional purposes, rather than to qualify as
accredited investors.
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).\86\ 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.\87\ 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
offerings.\88\ Fourth, it is possible that
[[Page 63322]]
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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\86\ See Accredited Investor Adopting Release at 64262.
\87\ Id.
\88\ 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 holding a charter
as a CFA in good standing would meet the requirements set forth in Rule
501(a)(10). Accordingly, we believe it is appropriate to designate
holding a charter as a CFA in good standing 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 a potential designation. We are particularly interested in
comments on whether we should designate holding a charter as a CFA in
good standing 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. 2026-20311 Filed 10-2-26; 8:45 am]
BILLING CODE 8011-01-P
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