SEC proposal: expanded accredited investor eligibility for natural persons

The U.S. Securities and Exchange Commission has proposed a sweeping overhaul of private market regulations, anchored by an initiative to expand accredited investor eligibility for natural persons beyond traditional wealth thresholds.

According to Cleary Gottlieb Steen & Hamilton, the SEC announced the package on September 30, 2026, under the banner of "responsible retailization." Historically, qualifying as an accredited investor required meeting rigid income or net worth benchmarks. By adding knowledge- and credential-based pathways under Rule 501(a)(10) of Regulation D, the Commission aims to recognize financial sophistication demonstrated through education and testing rather than portfolio size alone.

The newly proposed qualifying credentials supplement existing wealth tests rather than replace them. As detailed by Aoshearman, individuals holding U.S. CPA licenses, CFA charters, U.S. CFP certifications, or FINRA Series 79, 86, and 87 licenses in good standing would qualify. In addition, the SEC requested comment on a newly proposed FINRA-developed accredited investor examination. Modelled on the Securities Industry Essentials exam, the test would be open to anyone aged 18 or older without requiring firm sponsorship, comprising roughly 75 multiple-choice questions administered over a two-hour period at third-party test centers.

Alongside the accredited investor notices, the Commission advanced proposals to modernize performance fee rules for registered investment advisers and overhaul interval fund liquidity and share class structures. Sullivan & Cromwell notes that these concurrent measures address primary constraints on offering private market strategies to everyday savers, building on federal retirement initiatives such as Executive Order 14330.

The performance fee modernization proposal carries significant ramifications for registered funds and business development companies. According to Manatt, Section 205(a)(1) of the Investment Advisers Act of 1940 historically prohibited registered investment advisers from charging performance-based compensation except for certain qualified clients. The new framework introduces a fund board channel permitting registered funds to pay performance fees capped at 20 percent, provided specific governance standards and valuation safeguards are met. Furthermore, the proposal broadens the qualified client definition to align directly with accredited investor status under Regulation D.

Market observers have highlighted both the opportunities and risks inherent in the reforms. Manatt warns that performance fees on unrealized appreciation could incentivize excessive risk-taking or create fee burdens that fluctuate unfairly depending on when a shareholder buys or redeems fund shares. Similarly, Sullivan & Cromwell points out that interval fund changes—such as permitting monthly repurchases without individualized exemptive relief—will expand liquidity options while potentially increasing operational burdens for fund managers.

What to Watch Next

• Public comments for the interval fund proposal and accredited investor notices close on December 4, 2026.
• Public comments for the investment adviser performance-fee modernization proposal close on December 7, 2026.
• The Commission will review feedback before drafting final rules, meaning current wealth thresholds and 2020 credential limits remain in force until final adoption.