Yesterday I posted about remarks from Keith Higgins, head of CorpFin at the SEC, concerning general solicitation in securities placements for private companies.  Higgins also discussed SEC changes being considered in the definiton of Accredited Investor (that class of people who are favored in being able to invest in private placements under SEC Rules).

Today, for individuals, accredited status derives from net worth excluding primary residence of at least $1M per household, or annual earnings of $200,000 ($300,000 with spouse).  The Dodd Frank Act in 2010 required the SEC to revisit this definition in 2014, and the SEC is considering the following additional measures to achieve accredited status (no guarantee of what will be recommended ultimately):

First, possesson of a professional certification or degree such as CFA, CPA, a securities license (he pointedly did NOT mention attorneys– wonder if there is a message there?).

Second, ownership of other investment securities as an indication of an ability to exercise informed judgment (what if you hold a large portfolio and everything is down?).

Third, reliance on an intermediary such as a registered broker in making investment decisions (borrowing the sophistication of a third party to bolster one’s own sophistication).

Higgins promised a balancing between intelligent criteria and putting vulnerable investors at risk.  This focus on protecting invidual investors in placements is an interesting counterpoint to the front page of today’s WSJ:  seems that over the last 6 years as much as 60% of all stock trades were effected by “high frequency” trading firms.  While protecting individuals from fraud in private company placements is not ignoble, you have to wonder if there are not bigger regulatory fish to fry….