# Plain Language Summary: Equal Opportunity for All Investors Act of 2021

Right now, the government defines "accredited investors" mainly based on how much money you make or how much wealth you have. If you earn over $200,000 a year (or $300,000 with a spouse) or have a net worth over $1 million, you're automatically considered an accredited investor. This status matters because it lets you invest in private companies and special investment opportunities that regular people can't access. The problem, according to this bill, is that wealthy people might not actually understand the risks of these investments, even though they have the money to make them.

This bill would add a new way to become an accredited investor: by passing a certification exam. Instead of just having enough money, you could prove you understand what you're doing by taking a test created by the Securities and Exchange Commission (the SEC, which oversees financial markets). The exam would make sure you understand the specific risks of investing in private companies and would be designed so that someone with real financial knowledge or training would likely pass it. The test could be administered by securities associations that already handle other financial certifications.

The practical effect is that this opens the door for people who might not be wealthy but are financially knowledgeable to access these private investment opportunities. A teacher with a finance degree, a self-taught investor who's studied the markets for years, or someone with professional financial training could potentially qualify as an accredited investor through the exam route, even if they don't meet the income or wealth requirements. On the flip side, wealthy people who want to invest in these private opportunities would still have the option to use their income or net worth to qualify, or they could take the exam instead.

The bill wouldn't take effect for two years after it becomes law, giving the SEC time to develop and set up the certification exam. This is a relatively modest change to investment rules, but it could democratize access to certain investment opportunities that have traditionally been limited to the wealthy.

Equal Opportunity for All Investors Act of 2021

McHenry, Patrick T.

Equal Opportunity for All Investors Act of 2021 This bill expands who may be considered an accredited investor for purposes of participating in private offerings of securities. Certain unregistered securities may only be offered to accredited investors. Specifically, the bill allows an individual to qualify through an examination established by the Securities and Exchange Commission. The examination <ul> <li>must ensure that to be designated as an accredited investor, an individual understands and appreciates the risks of investing in private companies; </li> <li>must be designed to ensure that an individual with financial sophistication or training would be unlikely to fail; and </li> <li>may be administered by a registered national securities association. </li> </ul> Currently, accredited investors must satisfy certain requirements indicating their reduced exposure to financial risk, including those related to income, net worth, or knowledge and experience.