The U.S. Senate Judiciary Committee is set to release a new definition of accredited investor next week, according to The Hill.
Sen. Dick Durbin (D-Ill.) told reporters Thursday that the committee is working on a bill that would provide “a common definition for all accredited investors and that would be consistent with the definitions of all the states in our national investment code.”
“We’ve talked to a lot of people who are investing in the securities industry and they say they can’t even tell us how they’re investing,” he said.
Durbin noted that the term “accredited” is often used to describe the “accreditation” that many companies receive from investment banks and credit rating agencies.
He noted that a common definition of “accrediting agency” is the same as what is used by investment firms and credit ratings agencies.
“The question is, how do you separate that definition from the definitions that are used by the states and the federal government?” he said of the definition that has been proposed by Durbine.
“There are some definitions that, if you are an accredited investor and you don’t know how you’re doing, that is a definition that should be used.”
Durbine also pointed to a report from the Financial Crisis Inquiry Commission, which estimated that, “as of October 2017, there were approximately 11,400 accredited investors in the U.K. and 1,500 in the United States.”
“The idea that we are somehow different, or that we should be able to have different rules, is something that I think is a distraction from what we should really be doing,” he continued.
“We need to do a better job of connecting with the people who make these investments, who are buying them, who they are going to be investing in, and how they can invest in the future.”
The Financial Services Commission, the nation’s financial regulator, said in February that it would look at “the best way to define the accredited investor.”