Litigating Access to Private Markets

I.  Introduction

Some of the biggest and best-known U.S. companies are large private companies like Discord and Epic Games.1 In the past, going public was a prerequisite for a company to reach this size and stage of corporate growth. More recently, however, the private markets have grown to such an extent that companies raise more money in the private market than in the public market.2

But not everyone is allowed to buy private company shares. One of the gatekeepers is the regulatory requirement that investors be “accredited investors” to access certain prevalent private offerings.3 The Securities and Exchange Commission (SEC) has explained the rationale for this limit: “The accredited investor definition attempts to identify those persons whose financial sophistication and ability to sustain the risk of loss of investment or ability to fend for themselves render the protections of the Securities Act’s registration process unnecessary.”4 Only some investors make the cut.

As the markets have shifted to private capital-raising, a new and fundamental question has arisen: to what extent should retail investors have access to private markets? The question is fundamental in a legal sense because it implicates the underlying rationale for the oversight of the capital markets. To what extent is securities regulation driven by investor protection—and should it be? And how does this aim balance with the rest of the SEC’s declared mission of maintaining efficient capital markets and facilitating capital formation?5

The question is also fundamental in a societal sense. Is giving retail investors access to private markets a matter of “democratizing” access,6 finally wrestling with one of securities law’s dark secrets?7 Or is giving retail investors access to private markets really all about giving private markets access to retail investors?8

This symposium essay examines one slice of the question through a case study of litigations challenging the SEC’s accredited investor definition, especially the wealth qualifications. The focus is on litigation against the SEC or its commissioners, challenging rulemaking, either the SEC’s process of adopting the rule or the rule’s content.9 These challenges are rooted in the U.S. Constitution and/or in the Administrative Procedure Act (APA). The particular focus is a 2025 lawsuit brought in Texas federal district court against the SEC.10 In Kapszukiewicz v. SEC, plaintiffs challenged the accredited investor definition, especially its requirements that focus on wealth.11

This essay situates this lawsuit in two developments. First, it looks at two of the threshold issues raised in the litigation—jurisdiction and timing—that had been treated as settled but, if opened here, would have broad effects on challenges to rulemaking. Second, some of this litigation is part of systematic policy lawyering challenging SEC rules and rulemaking. While anecdotal, the case studies highlight possible routes for litigation to be an additional wild card in the increasingly expansive debate over access to private markets.

II.  “Accredited Investor”

The accredited investor definition emerged as an attempt to formalize and rationalize access to private placements, which do not require registration and thus lack many of the securities laws’ protections.12 A 1980 statute gave the SEC the power to prescribe rules and regulations about who qualifies as an accredited investor “on the basis of such factors as financial sophistication, net worth, knowledge, and experience in financial matters, or amount of assets under management.”13 Two years later, the SEC passed Regulation D, which is a set of rules that governs when an offering does not have to register.14 Rule 501 defines the relevant terms, including importantly “accredited investor.”15

The definition is structured as a list of categories; any person within any of the categories qualifies as an accredited investor.16 Net worth and income are two of the categories. Specifically, accredited investor includes “[a]ny natural person whose individual net worth, or joint net worth with that person’s spouse or spousal equivalent, exceeds $1,000,000.”17 It also includes “[a]ny 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 or spousal equivalent 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.”18 As time has passed, these cutoffs have not kept up with inflation, so have come to encompass a larger percentage of the U.S. population.19

Although the amounts have lagged behind, ever since the enactment of the 2010 Dodd–Frank Wall Street Reform and Consumer Protection Act, the SEC has been required to revisit and review the definition “at least once every four years.”20 Revisions in October 2020, for example, added new categories to the definition of who qualifies as an accredited investor, even though it did not address the wealth qualifiers.21 These rulemaking processes involve intensive commentary from various interested players, including some of the interest groups involved in litigation.22 The litigation thus coexists and interacts with rule changes and debates about the scope of the accredited investor definition within the administrative rulemaking process.

III.  Litigating the Accredited Investor Definition

In September 2025, plaintiffs Emily Kapszukiewicz and Healthcare Shares, P.B.C., sued the SEC, challenging the SEC’s accredited investor definition, especially its requirements that focus on wealth.23 This section describes the players and legal theories in Kapszukiewicz v. SEC, then puts the case into the context of contemporary litigation by one of the main players, ICAN, and prior litigation.

A.    Kapszukiewicz v. SEC (2025)

In a moment where Texas has made a move to be branded as aggressively business-friendly on several fronts,24 this litigation is partially a Texan story. The suit was filed in the federal trial court in the Northern District of Texas, Fort Worth Division.25 The judge is Chief District Judge Reed O’Connor, a George W. Bush appointee whom The New York Times described in the past as a “Conservative Favorite.”26 Texas law firm Gray Reed & McGraw LLP represents plaintiffs.27 Gray Reed advertises “business-minded attorneys” and promises clients “[w]ith an entrepreneurial spirit and tenacity, we do whatever it takes to meet your legal needs.”28

The other representative of plaintiffs is the Investor Choice Advocates Network (ICAN). Led by former chair of litigation in the Los Angeles office of prominent law firm Paul Hastings,29 ICAN advertises itself as “a not-for-profit public interest litigation organization committed to serving as legal advocate and voice for investors and entrepreneurs seeking to enter the capital markets.”30 Its slogan is evocative: “If ICAN, You Can.”31 If filled in, the rest of that sentence would probably be “ . . . sue the SEC.” ICAN litigates against the SEC, “defending the rights of small investors and entrepreneurs whose efforts,” according to ICAN, “are too often impeded by overzealous government regulation.”32

One of the plaintiffs, Emily Kapszukiewicz, was blocked from participating in a private offering. According to the complaint, she wanted to buy shares in Healthcare Shares, LP, a venture capital fund that includes healthcare professionals who want to invest as limited partners.33 Two third-party services that verify accredited investor status said that Kapszukiewicz did not qualify under SEC rules (Reg D, Rule 501).34 Her net worth and her annual income were too low.

To make its point about the irrationality of the SEC’s definition, the complaint points to Kapszukiewicz’s education and expertise. She graduated from Marquette University with a BA in Economics and an MS in Applied Economics.35 More recently, according to the complaint, Kapszukiewicz had even been able to buy shares in other private healthcare offerings. She had qualified to invest in Owl Therapy, a public benefit corporation and one of the fund’s portfolio companies, but not through the financial qualifications.36 She was Owl Therapy’s CEO, so qualified under another prong of the regulation that includes as accredited investors officers and directors of the company that is selling the shares.37

Along with Kapszukiewicz, the other plaintiff is Healthcare Shares, a public benefit company. The explanation for its presence is that the accredited investor rule “restrict[s] its ability to accept investments from knowledgeable and experienced individuals like Kapszukiewicz.”38

Finally, the defendant is the SEC, the independent federal agency with rulemaking and enforcement powers that oversees the U.S. capital markets. The norm is for the agency to have shifting priorities as political administrations change. At the time of the Kapszukiewicz complaint, the agency’s leaders had announced new positions about the extent to which retail investors should have private-market access, favoring greater access.39

While the suit quickly stalled in the context of a government shutdown,40 the contours of the complaint suggest potential litigation routes for challenges. One set of claims is based on the Administrative Procedure Act (APA).41 What the complaint calls the “Financial Restriction Rule” allegedly violates the law by “impos[ing] a burden on competition not necessary or appropriate in furtherance of the purposes” of the Exchange Act.42 It is “arbitrary and capricious” and “without statutory authority.”43

The other set of claims joins a strand of challenges to regulatory action rooted in the First Amendment and other constitutional requirements.44 Plaintiffs’ claim is that “desired participation in private offerings constitutes expressive conduct” by conveying “support for particular business models, social aims, innovations, and ideological commitments.”45 A claim that the financial restriction violates constitutional equal protection principles rounds out the complaint.46

ICAN’s description of the case harks back to the underlying tension in this area, pointing to a “barrier between everyday Americans and wealth-building opportunities” that is even more “damaging” given the decline in the number of publicly traded companies and “vast landscape of private investment opportunities” that “remains accessible primarily to the wealthy.”47

Implicit in the allegations was the idea that these restrictions are old-fashioned. The complaint’s opening paragraph pointed to the ability of “anyone” to “place bets on sports or play poker for money from their phone.”48 Since they can gamble at will, why restrict people from private investments?

The SEC filed a motion to dismiss in February 2026, which is pending at the time of writing.49 The defendant argued that plaintiffs lacked standing: the requested change would merely eliminate a route to qualification as an accredited investor, which would narrow the category and not remedy the alleged harms from the wealth limits.50 The SEC also argued that the case was brought in the wrong court (no jurisdiction or venue) and too late.51 The final argument was that the constitutional and APA claims failed to state a claim upon which relief could be granted, in part because Congress expressly gave the SEC authority to adopt a definition based on wealth and because of fundamental First Amendment distinctions.52

B.    Policy Litigation: ICAN’s Mandamus Petition (2024)

One of the contexts for the 2025 lawsuit is other litigation by one of the players, ICAN, the same firm representing Kapszukiewicz and Healthcare Shares P.B.C.

As noted above, the SEC is required to review the definition of accredited investor at least every four years. The SEC performed a mandatory review in 2023. As part of the process of soliciting and submitting commentary, ICAN petitioned the SEC in 2022 to replace the wealth requirements in the accredited investor definition with non-financial metrics to address disparate effects.53 

The SEC performed its 2023 review and even cited ICAN’s petition in its staff report.54 But the definition remained unchanged.55 ICAN responded by filing a Petition for Writ of Mandamus in the Ninth Circuit seeking to require the SEC to act on ICAN’s accredited investor rulemaking petition within thirty days.56 ICAN argued that the SEC had unreasonably delayed, which constitutes an exceptional circumstance justifying the extraordinary remedy of issuance of a writ of mandamus.57

The SEC’s rules provide that “[a]ny person desiring the issuance, amendment or repeal of a rule of general application may file a petition therefor with the Secretary.”58 The SEC, as required by the APA, must then “conclude [the] matter presented to it . . . within a reasonable time,” effectively creating the duty to act.59 ICAN argued that the six-factor balancing test governing mandamus petitions based on agency delay supported issuance of the writ.60

ICAN’s website provided an update in February 2025, stating that “the incoming SEC had a refreshingly different response to ICAN’s lawsuit” and “agree[ing] to extend by 30 days the SEC’s time to respond to [the] mandamus proceeding ‘to allow the parties time to negotiate a potential resolution.’”61 Shortly after that, ICAN filed a motion for voluntary dismissal, one way a settlement can show up on a docket sheet.62 The court granted the motion.63

C.    Prior Litigation: Morello v. White (2016)

One way of viewing Kapszukiewicz’s suit and ICAN’s petition for writ of mandamus is against the backdrop of less systematic (slightly wacky) prior litigation. The description of this particular case (Morello v. White) is anecdotal, of course. When combined with the dearth of litigation challenges to the definition,64 it suggests some recent plaintiffs’ willingness to challenge seemingly settled administrative and constitutional law, sometimes as part of broader policy agendas.

In 2016, Chase Morello sued the SEC Chair and the SEC in the Central District of California, asking the court to set aside the accredited investor definition.65 He brought a putative class action on behalf of a very broadly defined class: “all past, current, and future Non-Accredited Investors comprising more than 89.9% of Americans.”66 The pro se matter was assigned to a district court judge but quickly referred to a magistrate judge.67

Morello asserted five causes of action, alleging that the SEC rules defining “accredited investor” (1) violated Congress’s Article I powers, (2) infringed First Amendment rights, (3) infringed Fifth Amendment due process and equal protection rights, (4) constituted an uncompensated taking in violation of the Fifth Amendment, and (5) were arbitrary, capricious, and contrary to law in violation of the APA.68

Some of the Morello complaint echoes underlying concerns about the effects of restricting retail access to the private markets: “Non-Accredited Investors are relegated to the end of the investment waterfall, without their consent, solely based on their annual income or accumulated wealth.”69 “Non-Accredited are denied the benefit of investing in a high-risk high-return market possibly exacerbating wealth and income inequality.”70 Other parts of the complaint are more colorful, calling the definition “a discriminatory regulatory objectification based on antiquated social mores” that not only is “prejudicial” but also “feudal.”71

The SEC moved to dismiss, in part because the lawsuit was brought in the wrong court (federal trial court rather than appellate court, as the securities statutes required).72 Morello’s complaint also had, in the words of the SEC lawyer, “another flaw that would be fatal even if he had filed it as a petition for review in a court of appeals: it arrives several decades late.”73

The wide-ranging complaint also put the SEC into the position of articulating, among other things, a reason that the accredited investor definition did not “transgress the prohibition on grants of nobility”: “[n]othing in the legal regime for registering securities offerings or exempting them from registration grants a ‘title of nobility,’ such as Duke or Earl, with hereditary rights.”74

The court granted the SEC’s motion to dismiss for lack of subject matter jurisdiction.75 It noted that the Securities Act designated the federal appellate court as the appropriate reviewing court: “Any person aggrieved by an order of the Commission may obtain a review of such order in the court of appeals of the United States.”76 Although the statute refers to “orders,” not “rules,” the court considered them synonymous for the purposes of direct review.77 Accordingly, the court dismissed the complaint.78 The plaintiff does not appear to have refiled in any court of appeals.

IV.  Implications

The existing litigation points to two areas that deserve monitoring and attention. First, the court’s decision in Morello v. White presages threshold issues in the 2025 Kapszukiewicz court and in similar challenges. In particular, whether the rule counts as an order for the purposes of judicial review determines where the litigation must be brought and whether it is timely. It implicates broader questions in administrative law about channeling litigation into particular courts and where executive action should and can be reviewed.

Second, ICAN’s mandamus challenge, along with its involvement in the 2025 Kapszukiewicz suit against the SEC, illustrates the patterns of policy litigation aimed at administrative agencies and, in this case, at the SEC specifically. Litigation in this context can be understood as one tool among many in organized policy campaigns.

A.    Threshold Issues

Whether litigation is a viable avenue for challenging the accredited investor definition turns in part on one issue: whether the definition is an “order” for the purposes of Section 9 of the Securities Act.79 The answer to this question determines whether litigation like the Kapszukiewicz suit is brought in the proper court and whether it is timely. Indeed, the SEC moved to dismiss the Kapszukiewicz complaint in part on these grounds.80

As for jurisdiction, in general, the APA allows jurisdiction in federal district court,81 which is where Morello and Kapszukiewicz were filed. Challenges to administrative rules under a federal statute like the APA or under the U.S. Constitution are straightforward federal questions, which allow access to federal district court.82 A statute may, however, override this general grant of jurisdiction,83 and administrative statutes routinely locate judicial review of orders and/or rules in the appeals courts through so-called “channeling statutes.”84 Courts, in turn, have viewed this allocation to appellate courts as exclusive.85

In the context of the accredited investor definition, the relevant statutory provision determining the forum for judicial review is Section 9(a) of the Securities Act. This provides that “[a]ny person aggrieved by an order of the Commission may obtain a review of such order in the court of appeals of the United States,” and that this jurisdiction is “exclusive.”86

If the challenged agency action qualifies as an “order” and Congress intended the court of appeals to serve as the exclusive forum for initial review, the challenge must be brought in a federal court of appeals. So the question for the challenges to the accredited investor definition is whether the SEC’s regulations under 17 C.F.R. § 230.501(a) constitute a reviewable “order” under the meaning of Section 9(a).

Precedent is sparse, perhaps because it has long been treated as settled administrative law that orders encompass rules, absent a clear statutory indication to the contrary.87 When confronting this issue, the California district court in Morello held that SEC rules (including the accredited investor definition) counted as orders in the context of the Securities Act.88 The Morello court relied on the D.C. Circuit’s 2015 opinion in N.Y. Republican State Committee & the Tennessee Republican Party v. SEC:

For nearly four decades, it has been blackletter administrative law that, absent countervailing indicia of congressional intent, statutory provisions for direct review of orders encompass challenges to rules.89

The D.C. Circuit had established a presumption that “absent contrary congressional intent, a statutory review provision creating a right of direct judicial review in the court of appeals of an administrative ‘order’ authorizes such review of any agency action that is otherwise susceptible of review on the basis of the administrative record alone.”90 Investment Company Institute v. Board of Governors of the Federal Reserve System established this presumption in the late 1970s.91 According to the D.C. Circuit, it became a “tenet of administrative practice and is hornbook administrative law,” relied on by “[i]nnumerable litigants.”92

The specific statute matters. As the Morello court pointed out, the Securities Act (which defines accredited investor) lacks separate provisions specifying judicial review of “rules” versus “orders,” providing no indication that Congress intended to override the default presumption.93 In contrast, the Exchange Act differentiates between “rules” and “orders,” leading courts to conclude that challenges to rules not enumerated in the statute must be brought in federal district court.94

Whether the regulations count as an order also determines whether these arguments are timely. Recall that the SEC described Morello’s claim as “several decades late.”95 This argument relies on the requirement in Section 9 of the Securities Act that administrative orders be challenged within 60 days of the order’s entry.96 If the SEC’s accredited investor definition counts as an order, then a claim like Kapszukiewicz’s is too late; if it is not, then the likely time limit would be the six-year default.97

The threshold question of whether the rules count as an order may be open for reconsideration. Many courts – including relevantly the Supreme Court, Fifth Circuit, and Northern District of Texas – have never directly addressed whether “order” in Section 9(a) includes Securities Act rules or regulations, such as the accredited investor definition. Moreover, counterarguments to the current presumption include that the APA defines “order” to mean agency action “other than rulemaking.”98 The longstanding presumption was arguably preceded by the opposite presumption;99 reversion is not inconceivable. And, finally, at least one commentator has noted the D.C. Circuit’s movement, at least as of 2016, away from the default review of agency action in appellate courts towards allowing district court review.100

B.    Litigation Campaigns

The other set of implications has to do with how the litigation discussed here fits into broader policy campaigns aimed at the SEC and its powers, as well as administrative agencies more broadly. This observation requires less explication. Suffice it to point to ICAN’s declared agenda, of which these challenges to the accredited investor definition are a part, plus a brief comparison to a parallel effort.

ICAN’s self-identified accredited investor reform project includes multiple approaches.101 Yes, the list of activities includes ICAN’s 2022 petition for rulemaking, its mandamus petition, and the 2025 Kapszukiewicz suit. As of December 2025, ICAN also pointed to an ICAN-authored “2025 SEC Action Plan,”102 a published letter to the editor from ICAN’s president to the Wall Street Journal,103 commentary to the U.S. House Financial Services Committee,104 Substack posts about pending legislation,105 and a link for members of the public to “share your story” about “how this rule has affected you” – information that ICAN notes may be shared in the organization’s communications with the SEC.106

Accredited investor reform is just part of ICAN’s self-described agenda. Beyond expanding private-market access, they list “Restoring Due Process,” “Ending Excessive Punishments,” and “Reining in Regulatory Expansion” as issues the organization addresses.107

Perhaps a parallel in this subject area is something like the New Civil Liberties Alliance (NCLA).108 Multiple lawsuits have reached the Supreme Court about how agencies and adjudicatory systems are structured and how the adjudicators are appointed.109 The SEC in particular has spent about a decade at the center of the Supreme Court’s attention.110

Many of these challenges are part of a legal movement that has the explicit aim of undoing the administrative state through these court cases. Recurring lawyers and submitters of amicus briefs proclaim their aims publicly and proudly: “For over a century, unlawful administrative power has gradually displaced the Constitution’s avenues for lawmaking and justice. . . . The unconstitutional Administrative State is the focus of NCLA’s concern.”111

The point is not to conflate the various organizations and their goals, but merely to observe that litigation in this context is not necessarily a one-off. Instead it can be considered part of a broader policy agenda. Although the focus here is litigation about market access, the lawsuits should not be seen in isolation, but rather as part of a multipart campaign to reshape the SEC and —more broadly—the administrative state.

V.  Conclusion

Taken together, the litigation over the accredited investor definition – ranging from idiosyncratic early challenges to ICAN’s mandamus petition and the 2025 Kapszukiewicz suit – reveals how a once-settled corner of securities regulation could be newly contested. These cases expose threshold challenges to jurisdiction and statutory design that could reshape where and when SEC actions are reviewed. They also reflect broader policy campaigns that seek to shift the balance between investor protection and investor autonomy in increasingly private capital markets. Whether these efforts ultimately narrow, dismantle, or merely pressure the existing framework, they underscore that questions about access to private offerings are not confined to the rulemaking process but are part of a wider struggle over participation in the private market.

• CB INSIGHTS, The Complete List of Unicorn Companies, https://perma.cc/FH7S-5D5B (last visited Mar. 29, 2026).
• Michael J. Mauboussin & Dan Callahan, Public to Private Equity in the United States: A Long-Term Look 4 (Morgan Stanley Investment Management 2020).
• 17 C.F.R. § 230.501(a)(5); Securities Exchange Act of 1934 § 12(g), 15 U.S.C. § 78l(g). Retail investors have other emerging ways of investing in the private markets, including via funds, but these are not the focus of this essay.
• U.S. Sec. & Exch. Comm’n, Report on the Review of the Definition of “Accredited Investor” 5 (2015); Sec. & Exch. Comm’n v. Ralston Purina Co., 346 U.S. 119, 125 (1953) (explaining that the protections of a public offering do not need to reach “those who are shown to be able to fend for themselves”).
• Mission, U.S. Sec. & Exch. Comm’n (Nov. 7, 2025), https://perma.cc/5FJX-XXHE (describing the SEC’s mission as “protecting investors, maintaining fair, orderly, and efficient markets, and facilitating capital formation”).
• See, e.g., Democratizing Private Markets, KPMG, https://perma.cc/2WAE-SXUU; Colleen M. Baker & Christina M. Sautter, Democratization of the Private Markets?, 26 Transactions: Tenn. J. Bus. L. 67 (2025).
• See, e.g., Usha Rodrigues, Securities Law’s Dirty Little Secret, 81 Fordham L. Rev. 3389, 3390 (2013) (the “dirty little secret of U.S. securities law” is the ability of the wealthy to access “types of wealth-generating investments not available, by law, to the average investor”).
• The SEC Investor Advisory Committee heard panel remarks in December 2024 specifically on this issue; the remarks reflect this division. Investor Advisory Committee Meeting Agenda, U.S. Sec. & Exch. Comm’n (Dec. 2024), https://perma.cc/YK83-5EKY.
• Challenges to individual determinations of whether a particular person qualifies as an accredited investor are outside this essay’s scope. For examples of these individual challenges, see, e.g., Evans NexTech AR Solutions Corp., No. 20-CV-03880, 2024 WL 759296, at *10–11 (E.D.N.Y. Feb. 23, 2024) (finding, in the context of summary judgment, genuine dispute about one plaintiff’s accredited investor status); U.S. Sec. & Exch. Comm’n v. Bronson, 14 F. Supp. 3d 402, 411–12 (S.D.N.Y. 2014) (dismissing because accredited investor status was inadequately supported on the pleadings); U.S. Sec. & Exch. Comm’n v. Garber, 990 F. Supp. 2d 462, 466–68 (S.D.N.Y. 2014) (ordering production of tax returns in a discovery dispute to aid in determining accredited investor status).
• See Complaint, Kapszukiewicz et al. v. U.S. Sec. & Exch. Comm’n, No. 4:25-cv-975 (N.D. Tex. Sept. 8, 2025) [hereinafter Kapszukiewicz Complaint].
• Id.
• Revision of Certain Exemptions From Registration for Transactions Involving Limited Offers and Sales, 47 Fed. Reg. 11251 (Mar. 16, 1982).
• Small Business Investment Incentive Act of 1980, Pub. L. No. 96-477, 94 Stat. 2275 (1980) (codified at § 2(a)(15) of the Securities Act, 15 U.S.C § 77b(a)(15)) (defining “accredited investor” to mean “any person who, on the basis of such factors as financial sophistication, net worth, knowledge, and experience in financial matters, or amount of assets under management qualifies as an accredited investor under rules and regulations which the Commission shall prescribe”).
• Revision of Certain Exemptions from Registration for Transactions Involving Limited Offers and Sales, 47 Fed. Reg. 11251 (Mar. 16, 1982) (Rules 500-508).
• 17 C.F.R. § 230.501 (2025).
• 17 C.F.R. § 230.501(a) (2025).
• Id. The rule provides more detail about the calculation of net worth, perhaps most notably excluding the value of the person’s primary residence. See 17 C.F.R. § 230.501(a)(5)(i)(A) (2025).
• 17 C.F.R. § 230.501(a)(6) (2025).
• See Verity Winship, Private Company Fraud, 54 UC Davis L. Rev. 663, 678–79 n.71 (2020).
• Dodd–Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 111-203, § 413(b)(2)(A), 124 Stat. 1376 (2010) (requiring the SEC to “undertake a review of the accredited investor definition . . . at least once every four years . . . to determine whether [its] requirements . . . should be adjusted or modified”).
• 17 C.F.R. § 230.501(a) (2025); see generally Winship, Private Company Fraud, supra note 19, at 678–79.
• Comments on Proposed Rule: Amending the “Accredited Investor” Definition, U.S. Sec. & Exch. Comm’n, https://perma.cc/K4Q4-Z8V8 (last updated Dec. 18, 2025); see generally Adam C. Pritchard et al., SEC Rulemaking: An Empirical Analysis of Comments and Memoranda (Feb. 13, 2025) (unpublished manuscript).
• Kapszukiewicz Complaint, supra note 10.
• See, e.g., Christine Hurt, Texas, Delaware, and the New Controller Primacy, 67 Ariz. L. Rev. 693 (2025).
• Kapszukiewicz Complaint, supra note 10; see generally Elisha, New York Dominance in Securities Cases Threatened by North Texas, Bloomberg Law (Nov. 17, 2025).
• Manny Fernandez, In Weaponized Courts, Judge Who Halted Affordable Care Act Is a Conservative Favorite, N.Y. Times (Dec. 15, 2018).
• Gray Reed & McGraw has also represented ICAN in the submission of amicus briefs against the SEC. See, e.g., Brief for California Alternative Investments Association and Investor Choice Advocates Network (ICAN) as Amici Curiae Supporting Respondents, Nat’l Assoc. Priv. Fund Managers v. SEC, No. 23-60626 (5th Cir. Dec. 14, 2023).
• Overview, Gray Reed, https://perma.cc/MR7S-PY6B.
• ICAN, 2024 Annual Report 2 (2024).
• Brief for California Alternative Investments Association and ICAN as Amici Curiae Supporting Respondents, supra note 27 (“Through its advocacy efforts, ICAN seeks to draw official attention among the judiciary and regulatory bodies to the serious challenges facing investors and entrepreneurs.”).
• ICAN, https://perma.cc/CL3B-U58V (last visited Feb. 24, 2026) (“Investor Choice Advocates Network (ICAN) is a nonprofit public interest litigation organization dedicated to breaking down barriers to entry to capital markets and pushing back against overreach by the Securities and Exchange Commission (SEC), serving as a legal advocate and voice for small investors and entrepreneurs whose efforts help fuel vibrant local and national economies driven by innovation and entrepreneurship.”).
• Brief for Investor Choice Advocates Network (ICAN) as Amici Curiae Supporting Respondents, Chamber of Commerce of the USA v. SEC, No. 23-60255 (5th Cir. May 16, 2023).
• Healthcare Shares, https://perma.cc/TU6M-NV64 (last visited Feb. 24, 2026) (“Our venture capital firm invests in healthcare startups and founders that are seeking to improve the health of the public. The investors in our fund are primarily physicians and healthcare executives who want to invest in social impact healthcare startups.”). For analysis of the LP structure in this context, see Kobi Kastiel & Yaron Nili, Opting Out of Court? Reputation and Informal Norms in Private Equity, Vand. L. Rev. (forthcoming 2026).
• Kapszukiewicz Complaint, supra note 10, ¶ 16.
• Id. ¶¶ 1–3.
• Id. ¶ 20.
• Id. ¶¶ 18, 20; 17 C.F.R. § 230.501(a)(4) (2025) (including “[a]ny director, executive officer, or general partner of the issuer of the securities being offered or sold” in the definition of accredited investor).
• Kapszukiewicz Complaint, supra note 10, ¶ 5.
• See, e.g., Mark T. Uyeda, Comm’r, Sec. & Exch. Comm’n, Remarks by Commissioner Uyeda on the Diversification Deficit: Opening 401(k)s to Private Markets (Nov. 21, 2025).
• Order, Kapszukiewicz v. U.S. Sec. & Exch. Comm’n, No. 4:25-cv-00975-O (N.D. Tex. Oct. 29, 2025) (“ORDER: Before the Court is Defendant’s Unopposed Motion for Stay of Proceedings in Light of Lapse in Appropriations (ECF No. 13) filed on October 28, 2025”).
• 5 U.S.C. § 706.
• 15 U.S.C. § 78w(a)(2); Kapszukiewicz Complaint, supra note 10, ¶¶ 55–56.
• Kapszukiewicz Complaint, supra note 10, ¶¶ 59, 60, 63, 64.
• See, e.g., Powell v. U.S. Sec. & Exch. Comm’n, 149 F.4th 1029 (9th Cir. 2025); U.S. Sec. & Exch. Comm’n v. AT&T, Inc., 626 F. Supp. 3d 703 (S.D.N.Y. 2022); Cato Inst. v. Sec. & Exch. Comm’n, 4 F.4th 91 (D.C. Cir. 2021); Cato Inst. v. Sec. & Exch. Comm’n, 438 F. Supp. 3d 44 (D.D.C. 2020).
• See Kapszukiewicz Complaint, supra note 10, ¶ 68.
• Seeid. ¶¶ 75–77.
• ICAN, Emily Kapszukiewicz & Healthcare Shares, P.B.C. v. SEC, https://perma.cc/B4BJ-XZQA (last visited Feb. 24, 2026) (“What does it say about our system when someone trusted to run a healthcare company is told she can’t invest in one? Emily, a seasoned leader with nearly a million in savings, was barred from backing a healthcare fund aligned with her own expertise because of the accredited investor rule. This rule strips away the basic right to pursue economic opportunity—a right at the heart of the American promise. Instead of empowering skilled, mission-driven people like Emily, the SEC’s wealth and income test reserves the best opportunities for the wealthy few. ICAN is stepping in to fight back.”).
• See Kapszukiewicz Complaint, supra note 10, ¶ 1.
• Def.’s Mot. to Dismiss, Kapszukiewicz et al. v. U.S. Sec. & Exch. Comm’n, No. 4:25-cv-975 (N.D. Tex. Feb. 26, 2026).
• Id. at 11-19. The SEC also pointed to flaws in who was making the claims and whether the individual plaintiff would actually qualify under the wealth criteria. Id.
• Id. at 1 (“[P]laintiffs have come to the wrong court at the wrong time.”); id. at 19-27.
• Id. at 27-40.
• Letter from Nicolas Morgan to Vanessa A. Countryman, Sec’y, Sec. & Exch. Comm’n, Petition for Rulemaking Replacing Net Worth and Income Requirements Under Rule 501(a) to Reduce DEI Barriers (Nov. 9, 2022), https://perma.cc/E7MC-6HCT.
• SEC, Review of the “Accredited Investor” Definition under the Dodd-Frank Act 174 (Dec. 14, 2023).
• Id.
• Pet. for Writ of Mandamus, In re Inv. Choice Advocs. Network, No. 24-7507 (9th Cir. Dec. 12, 2024).
• Id. at 11.
• 17 C.F.R. § 201.192(a).
• Pet. for Writ of Mandamus, In re Inv. Choice Advocs. Network, No. 24-7507 (9th Cir. Dec. 12, 2024) (citing In re A Comm. Voice, 878 F.3d 779, 784 (9th Cir. 2017)); see 5 U.S.C. § 555(b).
• Pet. for Writ of Mandamus at 13–21, In re Inv. Choice Advocs. Network, No. 24-7507 (9th Cir. Dec. 12, 2024).
• See ICAN, Accredited Investor Rule Reform, https://perma.cc/KK94-5VRX (last visited Mar. 29, 2026).
• See Mot. to Voluntarily Dismiss, In re Inv. Choice Advocs. Network, No. 24-7507 (9th Cir. Sept. 10, 2025), Dkt. No. 17; Theodore Eisenberg & Charlotte Lanvers, What Is the Settlement Rate and Why Should We Care?, 6 J. Empirical Legal Stud. 111, 117 (2009) (pointing to empirical work that codes voluntary dismissal as a settlement, though also noting that some of these dismissals may instead be decisions to refile or simply not to litigate).
• See Order Granting Mot. to Voluntarily Dismiss, In re Inv. Choice Advocs. Network, No. 24-7507 (9th Cir. Sept. 12, 2025), Dkt. No. 18.
• A search for court challenges to the definition identified the few decisions cited in this essay.
• Compl., Morello v. White, No. 2:16-cv-04440 (C.D. Cal. Jun. 20, 2016) [hereinafter Morello Complaint].
• Id. ¶ 5.
• Notice of Judge Assignment and Reference to a United States Magistrate Judge, Morello v. White, No. 2:16-cv-04440 (C.D. Cal. June 20, 2016) (referring from the assigned district court judge to the magistrate judge on same date as the complaint was filed).
• Morello Complaint, supra note 65.
• Id. ¶ 18.
• Id. ¶ 20.
• Id.¶ 12.
• Mem. of Law in Supp. of Def.’s Mot. to Dismiss Pursuant to Federal Rules of Civil Procedure 12(b)(1) & 12(b)(6) *8, Morello v. White, No. 2:16-cv-04440 (C.D. Cal. Oct. 6, 2016).
• Id. (pointing out that the challenge would have to be filed within 60 days, but this was filed within 34 years).
• Id. at 16.
• See Morello v. White, No. CV 16-04440, 2017 WL 4404306, at *4 (C.D. Cal. Sept. 5, 2017) (magistrate judge’s report and recommendation). The district court adopted the report and dismissed the case without prejudice. See Morello v. White, No. CV 16-4440 DMG (AJW), 2017 WL 4355893, at *1 (C.D. Cal. Sept. 27, 2017).
• Section 9(a) of the Securities Act of 1933, 15 U.S.C. § 77i(a).
• Morello v. White, No. CV 16-04440, 2017 WL 4404306, at *3 (C.D. Cal. Sept. 5, 2017) (“[A]bsent countervailing indicia of congressional intent, statutory provisions for direct review of orders encompass challenges to rules.”) (quoting N.Y. Republican State Comm. v. Sec. & Exch. Comm’n, 799 F.3d 1126, 1129, 1131 (D.C. Cir. 2015)).
• Id. at *4.
• Section 9(a) of the Securities Act of 1933, 15 U.S.C. § 77i(a).
• Def.’s Mot. to Dismiss, Kapszukiewicz et al. v. U.S. Sec. & Exch. Comm’n, No. 4:25-cv-975, at 22 (N.D. Tex. Feb. 26, 2026) (“Plaintiffs have not only come to the wrong court, they have come at the wrong time.”).
• Nuclear Info. Res. Serv. v. U.S. Dept. of Transp. Rsch. & Special Programs Admin., 457 F.3d 956, 958–59 (9th Cir. 2006) (according to the APA, judicial review “may follow one of two paths: (1) a lawsuit against the agency in a federal district court under 28 U.S.C. § 1331; or (2) direct review of the agency action in the court of appeals.”).
• 28 U.S.C. § 1331.
• Nuclear Info. Res. Serv., 457 F.3d at 958–59 (9th Cir. 2006) (“[W]here a federal statute provides for direct review of an agency action in the court of appeals,” this “override[s] general grants of jurisdiction to the district courts.”).
• See Adam S. Zimmerman, The Class Appeal, 89 U. Chi. L. Rev. 1419, 1485 (2022) (noting that “hundreds of laws – colloquially known as ‘channeling statutes’ – require that disaffected groups contest government bodies directly in appellate courts”); id. at 1485, Appendix A: Federal Statutes Channeling Review Directly into Appellate Courts (listing statutes and provisions, including Section 9(a) of the Securities Act); Richard J. Pierce, Jr., Administrative Law Treatise vol. 3 § 18.2, at 1683 (5th ed. 2010) (noting that “[r]ules [are] usually subject to circuit court review”).
• Joseph W. Mead & Nicholas A. Fromherz, Choosing a Court to Review the Executive, 67 Admin. L. Rev. 1, 11 (2015) (noting generally that “[w]hen a circuit court has jurisdiction under a specific statutory provision, that jurisdiction is exclusive and preempts district court jurisdiction over that claim”) (citing Palumbo v. Waste Techs. Indus., 989 F.2d 156, 161 (4th Cir. 1993)).
• 15 U.S.C. § 77i(a) (“Any person aggrieved by an order of the Commission may obtain a review of such order in the court of appeals of the United States, within any circuit wherein such person resides or has his principal place of business, or in the United States Court of Appeals for the District of Columbia. . . . The jurisdiction of the court shall be exclusive and its judgment and decree, affirming, modifying, or setting aside, in whole or in part, any order of the Commission, shall be final, subject to review by the Supreme Court of the United States.”).
• Morello v. White, 2017 WL 4404306, at *3–4 (C.D. Cal. Sept. 5, 2017); see also New York Republican State Comm. & Tenn. Republican Party v. Sec. & Exch. Comm’n, 799 F.3d 1126, 1129 (D.C. Cir. 2015).
• See Twin Rivers Paper Co. LLC v. Sec. & Exch. Comm’n, 934 F.3d 607, 617 n.1 (D.C. Cir. 2019) (“The word ‘order’ encompasses SEC rules in the context of the Securities Act . . . see N.Y. Republican State Comm., 799 F.3d 1130–34, but not in the context of the Exchange Act, Am. Petrol. Inst. v. Sec. & Exch. Comm’n, 714 F.3d 1329, 1333–37 (D.C. Cir. 2013).”).
• N.Y. Republican State Comm., 799 F.3d 1126, 1130–31 (D.C. Cir. 2015) (citing Investment Co. Inst. v. Bd. of Govs. of the Fed. Rsrv. Sys., 551 F.2d 1270 (D.C. Cir. 1977)).
• Id.
• 551 F.2d 1270 (D.C. Cir. 1977).
• New York Republican State Comm., 799 F.3d at 1131-33 (citing Charles Alan Wright et al., Federal Practice and Procedure § 8299 (2006)).
• Morello v. White, No. CV 16-04440, 2017 WL 4404306, at *4 (C.D. Cal. Sept. 5, 2017).
• See Exchange Act § 25(b), 15 U.S.C. § 78y(b) (judicial review of “a rule of the Commission promulgated pursuant to [sections of the Act]”); Exchange Act § 25(a), 15 U.S.C. § 78y(a) (judicial review of “a final order”); Am. Petrol. Inst., 714 F.3d at 1332–33 (D.C. Cir. 2013) (holding that the appellate court lacked jurisdiction because the rule challenged did not appear on the list of rules in the Exchange Act channeled into the court of appeals).
• Mem. of Law in Supp. of Def.’s Mot. to Dismiss Pursuant to Federal Rules of Civil Procedure 12(b)(1) & 12(b)(6) *8, Morello v. White, No. 2:16-cv-04440 (C.D. Cal. Oct. 6, 2016).
• 15 U.S.C. § 77i(a) (“Any person aggrieved by an order of the Commission may obtain a review. . . by filing in such Court, within sixty days after the entry of such order, a written petition praying that the order of the Commission be modified or be set aside in whole or in part.” (emphasis added)).
• American Stewards of Liberty v. Dep’t of Interior, 960 F.3d 223, 229 n.3 (5th Cir. 2020) (explaining that APA claims ordinarily fall under the six-year catch-all limitations period in 28 U.S.C. § 2401(a)); see also 28 U.S.C. § 2401(a) (“[E]very civil action commenced against the United States shall be barred unless the complaint is filed within six years after the right of action first accrues.”).
• 5 U.S.C. § 551(6) (“‘[O]rder’ means the whole or a part of a final disposition, whether affirmative, negative, injunctive, or declaratory in form, of an agency in a matter other than rule making . . . “); see also id. § 551(4) (separately defining “rule”).
• New York Republican State Comm., 799 F.3d 1131 at 1130 (pointing to an earlier appellate opinion that “had attempted to create a presumption that orders did not encompass rules”); David P. Currie & Frank I. Goodman, Judicial Review of Federal Administrative Action: Quest for the Optimum Forum, 75 Colum. L. Rev. 1, 57 (1975) (reporting a study commissioned by the U.S. Administrative Conference and the Commission on Revision of the Federal Court Appellate System); id. at 5 (noting Securities among the agencies whose “orders bypass the district courts”).
• William Ortman, Rulemaking’s Missing Tier, 68 Ala. L. Rev. 225 (2016); Nat’l Fed. of the Blind v. Dept. of Transp., No. 15-1026, 2016 WL 3524569, at *1 (D.C. Cir. June 28, 2016).
• Accredited Investor Reform, ICAN Law, https://perma.cc/KK94-5VRX.
• ICAN Law, ICAN 2025 SEC Action Plan (2025).
• Nick Morgan, Letter to the Editor: Paternalism Reigns in an SEC ‘Investor’ Rule, The Wall Street Journal (Apr. 2, 2025) (“The current system’s paternalistic approach assumes that nonwealthy Americans lack the judgment to evaluate investment opportunities. Meanwhile, these same people have unlimited freedom to give away their money or spend it on lottery tickets, casino gambling or other high-risk activities with negative expected returns.”).
• Accredited Investor Reform, ICAN Law, https://www.icanlaw.org/accredited-investor (linking to Mar. 31, 2025, letter from ICAN to the House Financial Services Committee).
• Id. (“ICAN Warns HR 3994 Will Lock Investors Out, Not Let Them In (July 2025)”).
• Id.
• ICAN Law (last visited Mar. 29, 2026), https://perma.cc/6MA8-562D (“Issues” dropdown).
• New Civil Liberties Alliance, https://perma.cc/8L2U-9WRM.
• See, e.g., Collins v. Yellen, 594 U.S. 220, 227 (2021) (successfully challenging the Federal Housing Finance Agency’s structure); United States v. Arthrex, Inc., 594 U.S. 1, 6, 23 (2021) (Administrative Patent Judges); Seila Law LLC v. Consumer Fin. Prot. Bureau, 591 U.S. 197, 202-05 (2020) (holding that “the structure of the CFPB violates the separation of powers” because its director “must be removable by the President at will”); Free Enter. Fund v. Pub. Co. Acct. Oversight Bd., 561 U.S. 477, 483-84, 492 (2010) (successfully challenging the PCAOB’s structure).
• Sec. & Exch. Comm’n v. Jarkesy, 144 S. Ct. 2117, 2174-75 (2024); Axon Enterprises v. FTC, 598 U.S. 175 (2023) (decided together with U.S. Sec. & Exch. Comm’n v. Cochran); Liu v. Sec. & Exch. Comm’n, 591 U.S. 71 (2020); Lucia v. U.S. Sec. & Exch. Comm’n, 585 U.S. 237 (2018); Kokesh v. Sec. & Exch. Comm’n, 581 U.S. 455 (2017); Salman v. United States, 580 U.S. 39 (2016).
• New Civil Liberties Alliance (last visited Mar. 29, 2026), https://perma.cc/8L2U-9WRM; see also Press Release, New Civil Liberties Alliance, Seven Supreme Court Victories Underscore NCLA’s Success in Limiting Unlawful Administrative Power (Summer 2024), https://perma.cc/JN83-3LJY (“Although we still enjoy the shell of our Republic, there has developed within it a very different sort of government—a type, in fact, that the Constitution was designed to prevent. The unconstitutional Administrative State is the focus of NCLA’s concern.”).