In mid-December, the SEC’s Office of the Investor Advocate delivered its Report on Activities for the Fiscal Year 2025 to Congress. As highlighted in the announcement, the report provides an update on the office’s investor research activities, discusses the office’s engagements with investors, and describes its ongoing advocacy efforts. 

I was interested to see this tidbit with data on accredited investors in the portion addressing the efforts of the Office of Investor Research:

We find that 12.6% of individuals in the U.S. population qualify as accredited investors. Individuals primarily qualify based on their reported net worth (capturing 9.7% of the population), followed by personal income (capturing 2.8% of the population) and household income (capturing 2.8% of the population). Least common is qualifying based on specialized expertise (capturing 1.7% of the population). The majority of accredited investors (75%) satisfy only a single criterion, while the remaining 25% satisfy two or more.

4.3% of those who qualify report owning private market securities described in the question as “private funds or offerings” and further specifying that these types of assets typically require investors to meet certain criteria.

That last statistic surprised me, so I looked up the working paper from June 2025 referred to in the report. I was even more surprised to see the data on non-accredited investor participation — I would have expected the gap in private market participation between accredited and non-accredited investors to be much wider.

Overall, 1.3% of respondents reported owning private market securities through ownership of interests in private funds or securities acquired in a private offering. Respondents who meet the accredited investor qualifications are more likely to report owning private market securities (4.3%) than non-accredited investors (1.1%). About one percent of those who did not qualify as an accredited investor report owning private market securities (Table 6).

The report gives words of caution, though.

We next examined how accredited investor qualification aligned with ownership of different types of financial assets. Respondents were asked to report which investment types they owned, using a list of different investment categories . . . This question included an option for private market securities described in the question as “private funds or offerings,” and further specifying that investing in these types of assets typically require investors to meet certain criteria . . . it does not perfectly align with the regulatory definitions. However, the question was worded to allow people to answer even when they unsure of which category their investments fall into . . .

As we were unaware of prior survey questions eliciting private market securities ownership, we randomly assigned respondents to report ownership in two ways. The first was “‘Private fund’ or ‘private offering,’ which typically requires certain income, wealth, or knowledge levels to participate.” The second was “‘Private fund’ or ‘private offering,’ which typically requires you to be an ‘accredited investor.’” Ultimately, we did not find any statistically significant differences in reported levels of ownership between these two statements, so we combined them for aggregated analysis . . .

Certain nonaccredited investors with knowledge or experience in financial and business matters may participate in Rule 506(b) private offerings, meaning that ownership may be possible. [FN 19: In addition, non-accredited investors may purchase securities in other securities offerings that are exempt from the registration requirements of the Securities Act of 1933. See, e.g., Rule 504 of Regulation D, Regulation A, and Regulation Crowdfunding.] Alternatively, such affirmative responses could reflect measurement error, including uncertainty by respondents over what constitutes a “private fund or offering,” or individuals who previously purchased private market securities no longer qualifying as an accredited investor after, for example, income loss. With cross-sectional data, we cannot determine the reasons for this mismatch.

– Meredith Ervine