Capital Ideas: Accredited Investors – Who Gets To Invest? Efforts In Washington To Unlock Capital Markets

Most Americans can buy luxury goods online, bet on sports apps, or trade volatile cryptocurrencies with ease. Yet, when it comes to investing in private companies—startups fueling innovation and small businesses driving local economies—they’re largely excluded.

The culprit? A decades-old SEC rule that limits private market investments to “accredited investors,” defined as those with a $1 million net worth (excluding their primary residence) or $200,000 in annual income. For everyday Americans, these thresholds are a formidable barrier, locking them out of wealth-building opportunities.

Dina Ellis Rochkind, a Fintech policy expert with nearly 30 years of experience on Capitol Hill, in the Executive Branch, and as an advocate at the law firm Paul Hastings, argues that this system is outdated and exclusionary.

Drawing on her pivotal role in shaping the JOBS Act of 2012, Rochkind offers a clear-eyed view of how Congress crafts laws that determine who gets to invest—and how those laws could evolve to democratize capital markets for crowdfunding and beyond.

The Accredited Investor Challenge in Congress

A recent House-passed bill, H.R. 3394, the Fair Investment Opportunities for Professional Experts Act, aims to expand the definition of accredited investors by recognizing certain professional credentials. However, it also codifies the existing wealth and income thresholds into law.

Rochkind warns this could be a misstep.

“When Congress gets too specific, laws become outdated quickly,” she says. By embedding these thresholds in statute, the bill risks limiting the SEC’s ability to adapt to today’s dynamic markets, where retail investing is booming and information is widely accessible.”

Rochkind’s perspective is grounded in her work on the JOBS Act, a bipartisan landmark she helped craft as a Senate staffer for Senator Pat Toomey. That legislation transformed investment crowdfunding by opening new pathways for capital formation, empowering entrepreneurs and retail investors alike.

“The JOBS Act was a once-in-a-generation moment,” she notes. But such legislative opportunities are rare, and missteps now could sideline everyday investors for years, leaving high-growth opportunities to the wealthy.”

Navigating the Legislative Maze

Rochkind provides an insider’s look at how Congress shapes financial policy. Crafting a bill like H.R. 3394 begins with a member of Congress directing staff to draft legislation, often in collaboration with stakeholders such as lobbyists, consumer groups, and agencies like the SEC.

“You’re working with interested parties to craft something workable,” she explains. In committee, hearings and markups refine the language, but compromises can introduce unintended consequences. “Most staff aren’t securities lawyers,” Rochkind points out. “They’re juggling broad portfolios, so the nitty-gritty details can get overlooked.”

The process becomes increasingly chaotic in the Senate, where floor negotiations can involve deals being made in real-time.

“You’re standing there, writing securities law on a piece of paper,” she says with a laugh. “It’s a little scary.”

This high-stakes environment highlights why overly prescriptive language—like codifying wealth thresholds—can hinder future flexibility.

Rochkind stresses that Congress must balance its authority with the SEC’s need to update rules as technology and markets evolve.

“Innovation moves fast,” she says. “If you’re too specific, the law can’t keep up.”

Bipartisan support can fast-track a bill, particularly in the House, where a “suspension of the rules” requires a two-thirds vote and signals broad consensus. Yet Rochkind cautions that even well-intentioned bills can falter if the language isn’t carefully crafted.

“Unintended consequences are common,” she says, noting that H.R. 3394’s rigid thresholds could inadvertently perpetuate exclusionary barriers.”

Education Over Exclusion

To broaden access, Rochkind advocates for education rather than wealth-based gatekeeping.

She’s critical of using existing FINRA exams, such as the Series 65, which are designed for financial professionals and focus on traditional asset classes.

“Those tests don’t teach you about private securities or how to spot red flags in alternative investments,” she argues.

Instead, she points to the possibility of a plain-English exam that equips everyday investors with practical skills—how to research a company’s leadership on LinkedIn, identify stock photo scams, or understand the risks of private securities.

This vision aligns with proposals like Senator Tim Scott’s Empowering Main Street in America Act, which calls for an accessible exam for non-experts.

Rochkind views this as an opportunity to promote financial literacy and inclusion, particularly for underserved communities.

“Tim Scott gets it,” she says. “This is about wealth creation and opportunity for everyone.”

She points to the enthusiasm of Gen Z investors, who are diving into crypto and meme stocks but lack guidance on private markets. A practical test could empower them to invest wisely in startups and small businesses.

Rochkind also questions H.R. 3394’s proposal to have FINRA approve such exams.

“Are they the right body?” she asks, noting that FINRA’s broker-focused structure may not suit retail investors.

A test for the masses should prioritize real-world applicability over industry jargon, ensuring it doesn’t exclude certain populations or favor those with financial backgrounds.

Why Crowdfunding Hangs in the Balance

For the crowdfunding ecosystem, the accredited investor debate is critical. If Congress entrenches outdated thresholds, retail investors will remain excluded from high-growth opportunities, while entrepreneurs lose access to diverse funding sources.

Thoughtful reform, however, could democratize capital markets, enabling more Americans to back the startups and causes they believe in.

Rochkind emphasizes that legislative momentum is fleeting. The JOBS Act passed in under a year—an anomaly in Congress’s slow grind. Today’s discussions, even if they don’t yield immediate results, create a record that shapes future policy.

“Every hearing, every floor transcript matters,” she says.

The SEC, under Chairman Paul Atkins, is also paying attention, and Capitol Hill’s focus on capital formation could spur the agency to revisit its rules if advocates maintain pressure.

A Call to Action

Rochkind’s advice to the crowdfunding community is straightforward: educate policymakers in clear, real-world terms.

“Most people on the Hill aren’t finance majors,” she says. “Explain the impact—how this affects entrepreneurs and investors on Main Street.”

By advocating for flexible, inclusive laws, the industry can recapture the JOBS Act’s transformative spirit and unlock private markets for all.

https://www.youtube.com/watch?v=RQ5CxuBCcLs

Nick Morgan is President and Founder of ICAN, the Investor Choice Advocates Network, a nonprofit public interest litigation organization dedicated to serving as a legal advocate and voice for everyday investors and entrepreneurs.  He was previously a partner in the Investigations and White Collar Defense Group at Paul Hastings law firm.  Morgan previously served as Senior Trial Counsel in the SEC’s  Division of Enforcement. Capital Ideas is a series created by Morgan and Dara Albright.