Capital Ideas: Minting Accredited Investors with Series 65

In a recent episode of Capital Ideas, hosts Nick Morgan and Dara Albright interviewed Jonathan Dunsmoor, a recovering securities attorney and the Chief Development Officer of The Blue Rock Organization, a company leveraging blockchain innovation to democratize economic opportunities.

Dunsmoor highlighted, for example, how blockchain can address issues such as naked short selling and enhance transparency in the securities market. Dunsmoor recounted his initial skepticism during the Initial Coin Offering (ICO) era, where he often advised potential clients against the risks involved. However, one client’s query about the feasibility of securities on the blockchain piqued his interest, leading him to explore the potential of blockchain technology.

This exploration revealed blockchain’s benefits, such as preventing manipulative activities exemplified by publicly traded meme stocks.

As the Chief Development Officer of Blue Rock, Dunsmoor emphasized his mission to make economic opportunities more accessible.

He announced Blue Rock’s initiative to utilize the FINRA Series 65 exam to enable individuals to become accredited investors without meeting the traditional financial criteria, which are often prohibitively high. The current requirements for accredited investor status demand a minimum income of $200,000 for individuals or $300,000 for couples, thresholds that are challenging for many outside major metropolitan areas.

Dunsmoor highlighted the socioeconomic disparities exacerbated by these stringent requirements, noting how they limit investment opportunities for many aspiring investors, particularly women and people of color.

The discussion explored the SEC’s accredited investor rule and its impact on wealth disparity and technological innovation.

The SEC's accredited investor rule and its impact on wealth disparity and technological innovation Click to Tweet

The rule’s limitations often force startups to choose between leveraging personal networks under Rule 506(b) or broadly soliciting under Rule 506(c), each with its constraints and challenges.

To address these issues, Dunsmoor discussed Blue Rock’s plan to promote the Series 65 exam as a pathway to accredited investor status. This approach aligns with recent SEC amendments allowing knowledge-based qualifications.

By passing the Series 65 exam, individuals can qualify as accredited investors, bypassing the financial thresholds.

Dunsmoor shared his personal experience of failing the exam, underscoring its difficulty and the need for proper preparation. Blue Rock’s initiative includes offering a free course to guide aspiring investors through the Series 65 exam process. The course aims to provide resources, study tips, and a community of learners to help more people achieve accredited investor status.

This initiative, according to Dunsmoor, could significantly broaden the pool of potential investors, fostering greater diversity and inclusivity in the economic landscape.

Dunsmoor and the hosts also discussed the need for further reforms in the accredited investor definition to better reflect actual knowledge and experience rather than just financial standing.

Dunsmoor cited legislative efforts and the importance of data collection to refine what makes a successful accredited investor.

Blue Rock’s approach to utilizing the Series 65 exam represents a potentially significant step towards making economic participation more inclusive, aligning with the broader goal of fostering diverse and empowered communities in the evolving financial ecosystem.




Nick Morgan is President and Founder of ICAN, the Investor Choice Advocates Network, a nonprofit public interest litigation organization dedicated to serving as a legal advocate and voice for everyday investors and entrepreneurs.  He was previously a partner in the Investigations and White Collar Defense Group at the law firm Paul Hastings.  Morgan also previously served as Senior Trial Counsel in the SEC’s  Division of Enforcement.

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