The US Securities and Exchange Commission is currently seeking public feedback on a proposal to allow retail investors to access private markets. Currently, only individuals with a net worth of at least $1 million or an annual income exceeding $200 000 qualify as accredited investors, granting them exclusive access to startups and private funds.
Under the proposed framework, the Financial Industry Regulatory Authority would develop an exam for individuals aged 18 and older. The test would consist of approximately 75 multiple-choice questions to be completed in person within two hours. The estimated fee for the exam is $100, with a passing score remaining valid for a period of 10 years.
The exam curriculum would focus heavily on investment risks, accounting for 20% to 28% of the content, alongside topics such as corporate governance and financial statements. The SEC is also evaluating whether professionals like CPAs, CFAs, and CFPs should receive automatic accreditation without the need for testing.
The initiative aligns with a broader effort by SEC Chair Paul Atkins to expand private market access for retail savers. This push coincides with a five-year decline in private fund fundraising, as institutional investors reduce their commitments due to lower exit and payout activity, according to data from PitchBook.
Public response to the proposal is mixed. Coinbase CEO Brian Armstrong supports the plan as a way to democratize market access. Conversely, critics like Noah Damsky of Marina Wealth Advisors argue that private products may not be suitable for retail investors, while SEC Commissioner Hester Peirce expressed concerns regarding continued government gatekeeping.
