The SEC statutory scheme includes the concept of an “accredited investor.”  This category of investor is allowed to invest in speculative private stock offerings.  You are accredited if you are a certain kind of financial professional or, more typically, if you have enough assets or earn enough money to meet certain specific economic thresholds.  These thresholds are not very high, given the effects of inflation, but in gross terms contemplate a middle-class person or household.  Net worth must be $1M or income must be $200K for an individual or $300K for a household.

It is not a secret that the current Federal Administration, which controls appointments to the SEC, is in favor of liberalizing access to different investment products.  This opening up of investments to the general public also can be achieved by lowering the standard applied to permissible investors in speculative stock offerings.  The SEC has just announced that shortly it will offer amendments to the regulatory scheme to make such offerings more generally available to the public; no details yet as to specifics.

Regulatory controls thought to protect the public have been favored by Democratic administrations over time.  It is no secret that Republican administrations favor less regulation in such areas.  A cynical view is that Republicans wish to favor business by exposing the average American to high risk.  A libertarian view is that Republicans want to empower all Americans to act as they choose in this arena, rather than leaving access to high-risk/high-reward opportunities just to the wealthy.

It is easy to anticipate the general thrust of the upcoming proposals, and the response from advocates of investor protection.  Shortly we will have the details of these proposals, which will be subject to a public comment period before adoption. Stay tuned. But remember that the SEC Commissioners will have the final definitive say.