Same-sex marriage and the accredited investor standard

A question this morning from a client about the accredited investor standard for married couples got me thinking: here is yet one more compelling reason for marriage equality in the United States.

The standard in question reads like this:

"(a) Accredited investor. Accredited investor shall mean any person who comes within any of the following categories, or who the issuer reasonably believes comes within any of the following categories, at the time of the sale of the securities to that person:

. . . 

"(5) Any natural person whose individual net worth, or joint net worth with that person's spouse, exceeds $1,000,000 [excluding the person's primary residence]. . . .

"(6) Any natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person's spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year[.]"

Emphasis added.

Presuming I'm correct to assume that the normative denotation of "spouse" implies marriage, couples in civil unions would not be "spouses" to one another. If the couple wished to be married, but state law didn't permit them to be, then they would be shut out of the ability to combine income or net worth to meet what is effectively a lower accredited investor standard for married couples.

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That sounds like discrimination on the basis of sexual orientation, and may violate the Equal Protection Clause of the Constitution.

Well, we know the accredited investor definition and standards are going to be the focus of regulatory revision, sooner than most of us otherwise want, probably. That being the case, a non-discriminatory standard should be changed to refer, not to "spouses," but to "partners."

Or maybe the staff could issue an interpretive release to say that it construes "spouse" to mean couples who are married or, where the law does not allow same sex couples to marry, same-sex couples.

Photo: 1st Marriage Licenses, King County, Washington / Flickr.


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