|This week, NAFOA submitted a comment letter to the Securities and Exchange Commission (SEC) in response to a proposed rule advocating for tribal government inclusion as accredited investors under the Securities Act of 1933. Under current regulations, tribal governments are excluded from the definition of accredited investors. NAFOA has actively worked toward an acceptable solution for inclusion that would seek parity with other governments, protect certain tribal assets, and ensure a level of suitability for participation.|
NAFOA's Recommended Fix
In developing our recommendation, NAFOA convened meetings with tribal leadership, tribal professionals, and diverse professionals from the different sectors of the investment community. To ensure parity, protection, and suitability, NAFOA recommended the following:
Background on Accredited Investor Exclusion
Indian Country suffers from a historical lack of access to capital and the exclusion of tribal governments as accredited investors further compounds this problem. As defined in the Securities Act, an accredited investor is a state plan, person, or institution that the Securities Exchange Commission (SEC) deems capable of taking on the economic risk of investment in securities that are unregistered. Its purpose is to add a protective layer between investment securities and the general public; however, the regulation was developed without considering tribal governments as investors. While correcting this oversight is important for the continued growth and diversification of tribal economies, it is also important for the management of tribal government economic risk.