Bill Text: CA SJR16 | 2021-2022 | Regular Session | Introduced
Bill Title: Financial services: investor certification examination process.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2022-06-22 - Re-referred to Com. on B. & F.I. [SJR16 Detail]
Download: California-2021-SJR16-Introduced.html
CALIFORNIA LEGISLATURE—
2021–2022 REGULAR SESSION
Senate Joint Resolution
No. 16
| Introduced by Senator Hertzberg |
June 15, 2022 |
Relative to financial services.
LEGISLATIVE COUNSEL'S DIGEST
SJR 16, as introduced, Hertzberg.
Financial services: investor certification examination process.
This measure would urge the United States Congress to enact legislation to institute a free online investor certification examination, renewable every four years.
Digest Key
Fiscal Committee: NOBill Text
WHEREAS, An analysis of the median family wealth shows that Hispanic families have just 21 cents in generational wealth for every dollar in a median White household in a similar economic strata. For African Americans, the numbers are even starker, with African American families having just 12 cents to the dollar of their White peers; and
WHEREAS, The persistent minority wealth gap results from many factors, not the least of which are structural barriers to financial advancement, like the financial means test associated with who may become an “accredited investor,” as that term is used by the United States Securities and Exchange Commission (SEC); and
WHEREAS, Many of the most lucrative investment opportunities are hidden from the general public behind an outdated and ill-conceived means testing process, termed SEC Rule 501 or “Accredited Investor and Qualified Purchaser” regulations. These regulations have the effect of preventing those without significant financial means from participating in pre-Initial Public Offerings (IPOs) and other investments that historically represent the most lucrative of investment opportunities; and
WHEREAS, Recently, the SEC recognized that the Rule 501 means test on personal investment opportunities was not an appropriate way of protecting retail investors from investment scams. The SEC has proposed that a second method of achieving Accredited Investor status might be a certification achieved by graduating from a school possessing a specialized credential; and
WHEREAS, Requiring those seeking to better their lives through financial investment to attend a special school would only serve to increase personal debt through student loans and would decrease the likelihood that disadvantaged communities, who most need the opportunity, would have access to it. And it ignores the realities of the modern education and investment landscape; and
WHEREAS, Just as many families are moving from the traditional institutional education model to a home-schooling model, many retail investors are also choosing to learn their craft at their own pace through free or very low cost online platforms. The proposed change to a gate-kept, specialized credential school would do nothing to enhance investor protection and would further marginalize the disadvantaged community of retail investors; and
WHEREAS, Ostensibly removing a barrier to advancement only to replace it with a locked gate is not a solution; and
WHEREAS, Californians agree that retail investors should be protected from predatory investment scams; however, a onetime certification can rapidly grow stale in an ever-changing landscape, just as a discriminatory means test does absolutely nothing to protect retail investors; and
WHEREAS, California’s diversity is one of its greatest strengths and barriers that target the financial opportunities of the disadvantaged are anathema to the American dream. All Californians deserve a chance to improve their personal financial position and we call upon the federal government to ensure that the path is free, fair, and clear; now, therefore, be it
Resolved by the Senate and the Assembly of the State of California, jointly, That the Legislature hereby urges the United States Congress to enact legislation to institute a free online investor certification examination, renewable every four years, as this format of accreditation process would allow market participants to learn through the vehicle of their choosing while ensuring that they meet the same standards as other participants; and be it further
Resolved, That the Legislature declares that enactment by the United States Congress of a free online investor certification examination would protect investors by being periodically updated to cover the changing financial landscape and regulatory environment, thus encouraging retail investors to stay current, while also opening up a clear and attainable path to financial advancement for disadvantaged communities; and be it further
Resolved, That the Secretary of the Senate transmit copies of this resolution to the President and the Vice President of the United States, and to the Members of the United States Congress.
