At an open meeting yesterday, the SEC announced that it was considering potential designations of additional credentials that would qualify an individual as an accredited investor. That may seem like an unusual way to expand accredited investor status, but remember that Rule 501(a)(10) of Reg D allows the Commission to designate “one or more professional certifications or designations or credentials from an accredited educational institution” as qualifying an individual for accredited investor status.

Here are the credentials that the SEC proposes to designate as conveying accredited investor status along with links to the individual notices the agency issued with respect to each potential designation:

(1) Passing an accredited investor examination to be developed by FINRA;
(2) Holding a license as a U.S. certified public accountant;
(3) Holding a charter as a Chartered Financial Analyst;
(4) Holding a certification as a Certified Financial Planner in the United States;
(5) Holding a license as a FINRA Investment Banking Representative license (Series 79) or a FINRA Research Analyst license (Series 86 and Series 87).

Rule 501(a)(10) requires the SEC to designate qualifying credentials only after notice and an opportunity for public comment, and to post the credentials recognized as satisfying the criteria for accredited investor status on its website. The comment period for the proposed designation of these credentials will end 60 days after publication of the relevant notices in the federal register.

– John Jenkins

Commissioner Hester Peirce’s last day on the job is Friday, October 2nd, and her departure will leave the SEC with just two sitting commissioners.  As Meredith blogged earlier this year, the way the SEC’s quorum rules work, having only two commissioners won’t affect its ability to act, but yesterday the SEC nevertheless opted to amend its quorum rule to account for the possibility that one commissioner might recuse himself from a particular matter. Here’s an excerpt from the SEC’s release adopting the amendment:

In prior years, the Commission has occasionally been in the position of having fewer than three members and believes it prudent to adapt its quorum rule to further accommodate that contingency. Moreover, the Commission has found that situations often arise in which one or more Commissioners have disqualified themselves or are otherwise disqualified from participating in a matter.

When such situations arise, it is important that the Commission be able to continue to conduct business. Accordingly, the Commission is amending the quorum rule to specify that, in a situation in which only one Commissioner is able to participate in a matter because all other Commissioners currently in office are disqualified from participating in that matter, the remaining member would constitute a quorum for that particular matter.

By now, you may well be asking how the Commission could adopt this rule without notice and opportunity for comment. The adopting release addresses that issue too:

The Commission finds, in accordance with the Administrative Procedure Act (the “APA”), that these amendments relate solely to agency management and organization and do not constitute a substantive rule. Accordingly, the APA’s provisions regarding notice of proposed rulemaking and opportunity for public comment are not applicable.

I doubt very much that appointing new SEC commissioners is high on the Trump administration’s agenda right now, but for the record, this is no way to run a railroad.

– John Jenkins

Check out our latest “Timely Takes” podcast featuring Cleary’s J.T. Ho & his monthly update on securities & governance developments. In this installment, J.T. reviews:

– SEC’s Rule 14a-8 Recission & Proxy Solicitation Modernization Proposals
– New CFIs on 13G/D & Form S-1
– SEC Proposal to Modernize Transfer Agent Regulation
– Insights from ISS’s 2026 Policy Survey
– NYSE’s Proposed five-year On-Ramp for Internal Audit Function

As a bonus, J.T. also discussed the SEC’s recent roundtable on 24-hour trading.

As always, if you have insights on a securities law, capital markets or corporate governance issue, trend or development that you’d like to share in a podcast, we’d love to hear from you. You can email me and/or Meredith at john@thecorporatecounsel.net or mervine@ccrcorp.com.

– John Jenkins