SEC Moves To Expand Credential-Based Accredited Investor Status—While Defending Arbitrary Wealth Requirement in Two Federal Courts
The Commission took a first step today toward recognizing additional professional credentials as qualifying a person to invest in private companies. Neither the two clients ICAN Law filed motions for last week nor the average American investor is helped by it.
FOR IMMEDIATE RELEASE September 30th, 2026
LOS ANGELES, CA— Hours after the Securities and Exchange Commission moved to recognize additional professional certifications and credentials as qualifying a person as an "accredited investor", the Investor Choice Advocates Network (ICAN Law), a nonprofit public interest litigation firm, pointed to two motions it filed in federal court last week that show what the Commission's action leaves untouched: the income and net worth thresholds at the center of the same rule, which the agency is defending in court even as it revisits the definition that contains them.
Today's action concerns Rule 501(a)(10), which allows the Commission to designate credentials that qualify a person as accredited regardless of wealth. It does not change the income and net worth thresholds in Rule 501(a)(5) and (6). Both of ICAN Law's clients are exactly where they were this morning. Emily Kapszukiewicz, a healthcare executive who fell short of the thresholds by a rounding error, holds none of the credentials at issue. Neither do the foreign investors whose eligibility Mona Shah's law firm documented before the Commission sued her over it.
The Commission has promised for years to revisit the accredited investor definition. In a December 2023 report, it listed ICAN Law's own rulemaking petition among the reform proposals it had received.
"Today's action concedes the premise of both of our cases," said Nick Morgan, founder and president of ICAN Law and a former senior trial counsel at the SEC. "If a credential can establish that a person is qualified to invest, then income and net worth were never measuring what the agency said they were measuring. That is welcome, and it is overdue. But adding names to the list of people allowed through the door is not the same thing as fixing the door. In Texas, the Commission is in federal court right now defending the very thresholds it is working around here. In New York, it sued a lawyer over whether her investors cleared them, without ever reading the records that answered the question. An agency cannot expand access in the morning and litigate to restrict it in the afternoon."
The two motions, filed last week, are described below.
Texas: a screenshot was enough
ICAN Law asked the court to reconsider its dismissal of Kapszukiewicz & Healthcare Shares, P.B.C. v. SEC, a challenge to the wealth and income thresholds brought on behalf of Emily Kapszukiewicz and Healthcare Shares, P.B.C.
Ms. Kapszukiewicz fell just short of the thresholds—roughly $195,000 in income against a $200,000 requirement, and roughly $850,000 in net worth against $1 million. Two verification services she used each confirmed she did not qualify, and a small healthcare fund turned her away twice, in March and April 2025.
Rather than defend the thresholds as applied to her, the Commission argued she "appears" to qualify through a separate provision, pointing to her role as an advisor to the fund and citing a screenshot of her LinkedIn profile. Reaching that conclusion requires moving from the Securities Act into the Investment Company Act, applying a 1997 SEC rule, following four layers of cross-reference, and reconciling the result against a 2014 staff no-action letter. Under that letter, the determination is not the investor's to make. It belongs to the fund manager, and the fund bears the risk when a purchaser turns out not to qualify.
The court adopted that theory and dismissed the case without reaching Ms. Kapszukiewicz's constitutional claims.
Even on the Commission's own terms, the path it describes is narrow and unattainable for most. At best, it would let Ms. Kapszukiewicz invest in the single fund she advises. It does nothing about any other private offering, and it leaves the arbitrary wealth thresholds untouched for every investor who has no such association to point to.
New York: 72,000 pages were not enough
In New York, a firm carried that risk and did extensive vetting, but it didn't matter. Mona Shah's law firm has experienced a years-long ordeal with the SEC after thoroughly documenting its investors' eligibility, only for the SEC to sue without doing the review the rules require.
ICAN Law served a motion for sanctions under Rule 11 of the Federal Rules of Civil Procedure against the Commission in SEC v. Ahmed, on behalf of immigration attorney Ms. Shah and her firm. Rule 11 requires every plaintiff, the government included, to investigate before signing a complaint.
The Commission sued Ms. Shah in November 2023 on a charge of selling unregistered securities, resting on an allegation that investors in three EB-5 offerings were not accredited.
The firm's process was built to answer that question. Every prospective investor sat for two consultations with an immigration attorney. The firm reviewed tax returns, bank statements, and property records, prepared a source-of-funds memorandum tracing every dollar of the $500,000 minimum, and obtained independent confirmation of accreditation from the escrow bank before any money moved. When it could not satisfy itself that someone qualified, it turned the investor away.
Four months before filing, Commission staff questioned Ms. Shah under oath, and she told them the investor files existed and where they were kept. The staff never looked at them and interviewed no one else at the firm, though the offering documents name the firm as special counsel and say its securities-qualified attorneys prepared them. Three days after the deposition, the Commission subpoenaed the firm's written policies and the checklist it sent to investors—but not the files that would have answered its own allegation. It sued anyway.
In January 2026, Ms. Shah produced more than 72,000 pages of those records. After nine months of responding that it lacked sufficient information to say whether the investors qualified, we served our motion. The rules gave the Commission three weeks to fix the problem first. Six days before that window closed, it withdrew those answers and replaced them with flat denials. After nine months of saying under oath that it could not tell either way, it now says they were not, explaining that the evidence it held all along was enough to know. If that is true, it could have said so in December 2025.
Documents handed over two years after you sued are not an investigation. They are the investigation the Commission should have done before it ever walked into court—and this is why Rule 11 exists.
No fraud and no investor harm has been alleged. Nearly three years in, Ms. Shah has spent a significant amount of time and money defending a charge the Commission brought without ever reading the records that answered it—records her firm built and kept for exactly that purpose. In Texas, the same agency told a court that a different investor "appears" to qualify on the strength of a screenshot.
"An agency that can outspend anyone it sues, is funded by the public, and exists to serve investors and our markets needs to be accountable—both to following the Federal Rules of Civil Procedure and making overdue reforms to investor access," said Morgan. “Congress, in 1980, gave the SEC a list of factors to work from—sophistication, net worth, knowledge, experience, assets under management—and the Commission essentially reduced all of it to two numbers, one of them an income test Congress never mentioned. Those numbers are arbitrary and are costing our clients, along with other everyday investors and entrepreneurs. We will continue working on this issue as long as the reform takes.”
For more information about ICAN's work, visit www.icanlaw.org or contact: info@icanlaw.org
About ICAN: The Investor Choice Advocates Network (ICAN Law) is a nonprofit organization dedicated to breaking down barriers to entry to capital markets and pushing back against regulatory overreach. ICAN advocates for fair and transparent regulatory practices, ensuring all individuals have equal access to investment opportunities and due process in the financial markets.
Contact Information: Investor Choice Advocates Network (ICAN) Email: info@icanlaw.org Website: www.icanlaw.org
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