September 12, 2025
Lawsuit Against SEC on Accredited Investor FOMO
Earlier this week, the non-profit public interest law firm Investor Choice Advocates Network (ICAN) announced that it has filed a lawsuit challenging the SEC’s accredited investor test on behalf of two plaintiffs — one individual investor and one venture capital fund. This is the latest of ICAN’s many efforts to reform the accredited investor definition.
The lawsuit argues that the accredited investor standard is “unconstitutional and unlawful” on the basis that it:
– Divides Americans into two classes — the wealthy, who get access to opportunity, and everyone else, who are shut out.
– Silences free speech and association — by blocking entrepreneurs from sharing opportunities and preventing investors from supporting causes they believe in.
– Violates federal law — by imposing wealth barriers Congress never authorized, based on arbitrary thresholds the SEC has never justified.
Perhaps a better title for this blog could be “accredited investor ROMO,” if I could use that to mean “Risk Of Missing Out.” As many have pointed out, the fact that more companies are staying private for longer means that more Americans miss out on investing during those high-growth years.
But change may already be in the works. The SEC’s Spring Reg Flex Agenda contemplates “Updating the Exempt Offering Pathways,” which includes simplifying “investor access to private businesses.” And the recommendations the Investor Advisory Committee will vote on next week support an “expanded focus on investor sophistication (rather than income or wealth) when determining accredited investor status.”
– Meredith Ervine
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