Startup Investors Fight For Gay-Couple Equality From SEC
It’s bad enough that gay-couples have had to fight so hard for marriage equality–now they can’t even get equal investment rights for startups? According to Reuters, a group of investors are currently fighting to secure investment rights equality for gay couples through the U.S. SEC Chair Mary Jo White.
By law, the general rule when investing in private placements and startups is that you need to be a “accredited investor”. This means that you must meet a certain income or net worth in order to be eligible. Married couples, however, can combine their incomes and meet this eligibility requirement.
Back in June, the U.S. Supreme court ruled against a federal law that denies federal benefits to same-sex married couples. This however, only protects couples in states where same-sex marriage is legal. It does not protect those joined in civil unions or domestic partnerships in states that have yet to legalize same-sex marriage.
Recently, a campaign has started called StartupEquality.org, which aims to deliver a petition to the SEC before September 23 to propose the following addition on how an “accredited investor” is defined in rule 501 of Regulation D:
A spouse of a natural person shall mean another person, regardless of gender or sexual orientation, whose relationship with the person specified: (1) may be characterized as such person’s (i) husband, (ii) wife, (iii) spouse, (iv) domestic partner, or (v) designated beneficiary under any applicable state law for the purpose of ensuring that each person in a two-person relationship has certain rights or financial protections based upon such designation; or (2) is that of the other party to a civil union with such person.
No matter where this goes, the law forbids the SEC to not able to make changes to the definition of accredited investor until 2014.