Emily Kapszukiewicz & Healthcare Shares, P.B.C. v SEC

Qualified to be a CEO but not an Investor

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Emily has spent her career helping others. She leads in the healthcare field, trusted to run companies and shape programs that affect patients’ lives. She knows how to read financial reports, weigh risks, and make hard decisions. In every sense, she is an expert.

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But when Emily wanted to invest her own savings in healthcare companies, she was surprised to find that the law said she could not. Her net worth is about $850,000, below the government’s arbitrary $1 million cutoff. Because she chose a life of service and impact instead of chasing personal fortune, the United States government does not consider Emily “qualified” to invest.

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The irony is hard to ignore. Emily has the qualifications to be a healthcare CEO—in fact, the company she wanted to invest in ended up hiring her to lead one of their portfolio companies. She can guide teams and budgets worth millions. But she cannot write a personal check to invest in the very field to which she has devoted her life. When the accredited investor rule stood in her way, she went so far as to offer to donate in order to advance the work in the causes she believes in.

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It is not just individuals like Emily who are hurt by the accredited investor rule. The limitations imposed by the regulation create serious roadblocks for organizations trying to do good, like the one in which Emily wanted to invest, Healthcare Shares Fund. For that reason, ICAN has taken the company on as a second client in the case.

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Healthcare Shares Fund is a venture capital firm and fund that was created to invest in social impact healthcare startups. Its leaders have deep experience in both finance and healthcare, and they built the fund to support companies working on projects such as promising new digital health platforms, medical device companies, and healthcare startups more broadly—things that stand to improve the health of millions of Americans. One of their goals is to have a venture capital fund where all of the investors are physicians or healthcare executives. 

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Healthcare Shares Fund has a goal of not only delivering returns to investors but also driving progress that benefits society. To achieve their mission, they certainly need capital, but they also need expertise from healthcare executives like Emily. The roadblock standing in the way of this mutually beneficial partnership is an arbitrary and unconstitutional wealth and income requirement.

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The SEC’s Rule That Breaks the Constitution—and Common Sense

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For decades, the SEC’s accredited investor rule has forced Americans to pass a wealth and income test before they can invest in private companies. Unless you have a net worth of $1 million or earn $200,000 a year, the government says you aren’t “qualified.” That’s not protecting investors—it’s paternalism shutting them out. And it’s unconstitutional.

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At its core, the rule denies equal protection. 

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With the accredited investor rule, the government is dividing the public into two classes: the wealthy, who get access to opportunity, and everyone else, who are told they don’t measure up. 

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A millionaire who has inherited their money and possesses no financial knowledge can invest freely, while someone like Emily—a healthcare CEO trusted to lead multimillion-dollar budgets—is blocked simply because her career of service has not made her a millionaire.

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By shutting down these associations between entrepreneurs and their supporters, the SEC’s rule interferes with core First Amendment freedoms. The Constitution protects not only expressive conduct—the right to share information—but also associational conduct—the right to join with others to act on shared goals. This rule blocks both. It tells innovators they cannot share opportunities with most Americans. And it tells investors they cannot decide for themselves how to use their hard-earned money to invest in causes or opportunities they want to support. 

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The impact is real. Healthcare Shares Fund cannot offer limited partner interests to the very healthcare leaders who understand its mission best—even when those leaders want to invest their own savings. A physician could go to medical school for years and, if they make $199,999 a year, be told they aren’t qualified to invest. That is not investor protection. It is the government silencing lawful speech and standing in the way of relationships that should be free to grow.

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Beyond these constitutional flaws, the rule also violates the Administrative Procedure Act. In Count I of our complaint, we explain that it is “contrary to law” because Congress never authorized the SEC to create arbitrary wealth barriers that impose heavy burdens on competition. By shutting out nearly all Americans, the agency has tipped the playing field in favor of the already wealthy, exactly the opposite of what securities laws were intended to do. In Count II, we argue that the rule is “arbitrary and capricious.” The SEC has never provided a reasoned explanation for why $1 million is the dividing line between “sophisticated” and “unqualified,” has ignored evidence about its harmful effects, and has failed to address how this barrier distorts both capital formation and wealth distribution. Rules that impact millions of Americans cannot be built on arbitrary numbers, unexplained assumptions, and unchecked bureaucratic discretion.

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Most fundamentally, the rule tramples the basic right to pursue economic opportunity. 

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For generations, our country has stood on the belief that Americans have the liberty to use their own skills and savings to participate in the economy. That right is stripped away when the government tells people like Emily they can run a company but can’t invest a modest sum in one.

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“The SEC has been warned for years that this rule widens the wealth gap and blocks capital from reaching entrepreneurs who need it most. Though policymakers and regulators continue to discuss reform, meaningful change has yet to materialize—making this lawsuit the next, and most powerful, step,” said Nicolas Morgan, ICAN’s Founder and President.

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“It doesn’t make sense that I can run a company but not invest in one,” said Emily Kapszukiewicz. “I’ve dedicated my career to social impact, entrepreneurship, and healthcare.”

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ICAN has made reform of the accredited investor rule one of its signature priorities. For years, the nonprofit has petitioned the SEC, testified before Congress, and published analysis showing how the rule deepens inequality and stalls innovation.ICAN is thankful for its co-counsel, Angela Brown and Chris Davis at Gray Reed, for their partnership on this case. 

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“That is why this case is so critical. A court ruling can do more than fix policy—it can set constitutional guardrails to ensure regulators can never again impose arbitrary barriers that shut ordinary Americans out of their own markets. America’s markets work best when they are open to everyone—not just the wealthy few.”

Mark Hiraide, ICAN’s Senior Legal Director & Policy Counsel.

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Main Street Gets Left Behind, But ICAN Steps Into the Fight

 

The accredited investor rule is one of the most damaging barriers in American markets today. Its flawed design reserves opportunity for the wealthy while locking out nearly everyone else.

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American companies today are increasingly staying private for longer and longer periods of time before going public. And fewer companies trade on public markets than in years prior. The statistics are notable:

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• In 1980, the median age of a company at its IPO was 6 years, whereas in 2021, the median age was 11.

• In 1980, the median market value of a company at its IPO (adjusted for inflation) was $105 million. In 2021, the median market value was $1.33 billion.

• From 1980 to 2000, there were over 6,500 IPOs. From 2001 to 2022, there have been fewer than 3,000.

(Source: Nasdaq.com)

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That means the greatest growth often occurs in private markets - markets that regular Americans are often being shut out of. The result is predictable: more wealth is accumulated by those who are already wealthy, while ordinary investors are seeing smaller returns on their investments. And when small businesses and entrepreneurs can’t access capital from the people who believe in them most, innovation stalls.

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This case shows exactly how that harm plays out. An experienced healthcare leader like Emily is told she cannot invest in the very field she has dedicated her life to. A mission-driven public benefit corporation like Healthcare Shares Fund is blocked from raising support from experts who share its vision. Both investors and entrepreneurs lose—and so does the public that would benefit from new treatments, cures, and ideas.

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“There are millions of healthcare professionals who have spent years in training and years serving patients—yet they are told they are not ‘qualified’ to invest in healthcare startups, even when they understand the underlying science better than anyone,” said Laurence Girard, CEO and Founder of Healthcare Shares.

 

"If we allow physicians and everyday people—not just large multinational corporations—to become owners in our healthcare system, we will build a more empathetic model of care, one that drives better outcomes and truly serves patients and communities,” Laurence added. 

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The public knows the system isn’t working. A recent Wall Street Journal poll found that nearly 70% of Americans believe the American dream is no longer possible. The accredited investor rule is Exhibit A of the regulatory burden that is producing the wrong outcomes for Main Street. It allows people to gamble unlimited sums in casinos, on sports, or on lottery tickets, but bans them from investing even a modest amount in companies trying to solve real problems.

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This case is about fairness, freedom, and the future of our markets. If successful, it will not only restore opportunity to investors—it will unlock capital for small businesses, fuel life-changing innovation, and prove that America’s markets work best when they are open to everyone, not just the wealthy few.

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