An accredited investor is an individual or entity that meets specific financial thresholds set by the SEC, qualifying them to invest in private securities offerings under Regulation D.
Why It Matters
Private funds rely on Regulation D exemptions to avoid registering their securities with the SEC. Accredited investor status is the baseline qualification for most of these offerings. If your fund accepts an investor who does not meet the standard, the exemption itself may be at risk.
Key Details
- Individual income test: $200,000 per year ($300,000 joint with a spouse) for the past two years, with a reasonable expectation of the same in the current year.
- Individual net worth test: $1,000,000 or more, excluding the value of your primary residence.
- Entity test: $5,000,000 or more in assets.
- Licensed professionals holding a Series 7, Series 65, or Series 82 qualify regardless of income or net worth.
- Knowledgeable employees of the fund also qualify as accredited investors.
For more, see Accredited Investor vs. Qualified Purchaser vs. Qualified Client.
Capital Company handles investor qualification verification as part of fund administration.
This content is for informational purposes only and does not constitute legal, tax, or compliance advice. Consult qualified counsel for guidance specific to your situation.