When Congress Gets It Wrong: Why H.R. 3394 Will Lock Investors Out, Not Let Them In

This bill risks locking in a restrictive framework that undermines investor choice under the guise of reform.

“H.R. 3394 masquerades as progress, but in reality, it locks investors into a rigid, outdated framework. Real reform means trusting people to make informed choices—not locking opportunity behind arbitrary wealth and income thresholds.”

— Mark Hiraide, Senior Legal Director & Policy Counsel, ICAN | Partner, Mitchell Silberberg & Knupp LLP

On June 23, 2025, the House of Representatives passed H.R. 3394, the Fair Investment Opportunities for Professional Experts Act, one of six bipartisan bills advanced by the House Financial Services Committee to modernize access to private investments. H.R. 3394 purports to do so by expanding the definition of “accredited investor” to include certain professionals based on education or experience.

Dating back to the early 80s, the SEC’s Accredited Investor Rule restricts those earning less than $200,000 a year (or with a net worth of less than $1 million) from making private market investments, despite no evidence that wealth equals financial sophistication. The outdated regulation, intended to “protect” investors, restricts the ability of the majority of Americans to put their money to work, limiting their opportunities to improve their financial circumstances and, by extension, that of their families and communities.

At ICAN, we firmly believe that the most effective way to protect investors is through transparency, disclosure, and education, rather than arbitrary limitations or institutional paternalism. Americans already face risks in numerous financial areas, from lottery tickets to cryptocurrencies to high-interest loans. Why should investing in promising private companies be the one area where they’re told they can’t decide for themselves?

We support expanding access to private markets, but H.R. 3394, as written, does the opposite.

It narrows existing eligibility, adds new bureaucratic hurdles, and restricts the SEC’s ability to reform the definition in the future. This bill risks locking in a restrictive framework that undermines investor choice under the guise of reform.

Here are the three biggest reasons H.R. 3394 should not move forward in its current form:

1. It Codifies—and Constrains—the SEC’s Rulemaking Authority

Under current law, the SEC has broad discretion to define the term “accredited investor” in a manner that evolves with the market. That flexibility has allowed the Commission to expand the category in thoughtful (if insufficient) ways, recognizing, for example, some licensed professionals and knowledgeable employees of private funds.

H.R. 3394 threatens that progress by codifying the 40-year-old income and net worth thresholds—$200,000 in annual income or $1 million in net worth—into the statute itself. That shift would severely limit the SEC’s future ability to remove the wealth and income metrics altogether through rulemaking.

Even more troubling, the bill introduces a new requirement that any educational or professional qualification must be verified by a self-regulatory organization (SRO), such as FINRA. This provision wasn’t part of the SEC’s rule and would create unnecessary red tape, slowing down eligibility and injecting unaccountable quasi-governmental organizations into the accreditation process.

2. It Adds Bureaucratic Layers Without Improving Investor Protection

The bill’s SRO verification requirement is a perfect example of regulatory over-complication with little upside. It suggests that individuals cannot be trusted to self-attest or provide documentation directly to issuers.

This added layer not only increases cost and delay, it creates new gatekeepers who may be less accountable than the SEC itself. It’s a solution in search of a problem, one that will likely chill participation rather than protect investors.

3. It Shrinks—Rather Than Expands—Accredited Investor Eligibility

While H.R. 3394 claims to expand access, its statutory language is actually narrower than the SEC’s current rule-based definition. It omits key categories of investors currently included in Rule 501(a), such as:

• “Knowledgeable employees” of private funds
  

• Family offices and family clients with more than $5 million in assets
  

• Certain business entities not formed for the specific purpose of investing
  

• Spousal equivalents, who can pool resources to meet financial thresholds
  

By failing to include these categories—or even to acknowledge them—the bill would strip accredited status from many individuals and entities who currently qualify. That’s not progress; it’s a rollback.

Conclusion: A Setback in Disguise

H.R. 3394 was introduced with good intentions, but its effect would be to make matters worse.

By hard-coding outdated wealth thresholds and outsourcing verification to unelected third parties, it undermines both investor autonomy and regulatory flexibility.

If Congress is serious about giving more Americans access to private markets, the clear path is to support SEC efforts to expand eligibility through a flexible, principles-based framework grounded in investor knowledge and risk awareness, rather than rigid income and wealth tests and third-party filters.

At ICAN, we believe that Americans are capable of making informed financial decisions when provided with the proper information. We urge lawmakers to reject this bill in its current form and instead pursue reforms that promote choice, fairness, and freedom in capital markets.

“This bill takes a step backward by embedding outdated wealth and income tests into law and tying the SEC’s hands. We need a flexible, forward-looking approach that trusts informed investors—not one that reinforces a two-tiered financial system.”

— Nick Morgan, Founder & President, ICAN

Subscribe to Unchained Markets to get notified when we publish additional timely, expert commentary on securities regulation, investor rights, and the future of financial freedom.