The Securities and Exchange Commission originally defined the “accredited investor” status back in 1982. Being an accredited investor means companies have the opportunity to solicit investments from qualified investors, many times as seed capital, without having to first register the offering withchanges to accredited investor status the SEC.

The passage of the Dodd-Frank Act also required the SEC to update its definition of an accredited investor every four years. And that four years is now. So what might the SEC consider?

The current definition of an accredited investor hasn’t changed since 1982 and the minimum qualifications concerned income and assets. To be considered an accredited investor, the individual must show at least $200,000 in income over the previous two years or $300,000 with a couple and the net worth of more than $1 million, not including the equity in a primary residence. One of the changes that may have more of an impact than others is to index the current income requirements and adjust to inflation since 1982. Generally speaking this could mean the individual requirement of $200,000 per year in income might mean $500,000 or more in today’s dollars.

The original thinking behind attaining accredited investor status is to facilitate the free flow of capital from private or institutional investors to startups or companies that wish to raise capital privately without SEC filings and reviews, which takes both time and money. Accredited investors are deemed to have reached a particular level of sophistication with regard to investments as evidenced by the amount of financial assets and sufficient income. This level of sophistication also suggests the ability to better withstand a financial loss from an investment along with the ability to more thoroughly analyze a potential investor. There will no doubt be more suggestions and any changes will require public comment but this will be the first time that the original statute has been altered in more than 30 years.