An accredited investor is an individual or entity that meets certain income or net worth requirements set by the Securities and Exchange Commission (SEC). Accredited investors are considered to be sophisticated investors who are able to understand the risks and merits of complex investment opportunities.
Individual accredited investors must meet at least one of the following criteria:
- Earned income that exceeded $200,000 (or $300,000 together with a spouse or spousal equivalent) in each of the prior two years, and reasonably expects the same for the current year.
- Has a net worth over $1 million, either alone or together with a spouse or spousal equivalent (excluding the value of the person’s primary residence).
- Holds in good standing a Series 7, 65, or 82 license.
Entity accredited investors must meet at least one of the following criteria:
- A registered investment company or business development company.
- A bank, savings and loan association, insurance company, or registered investment adviser.
- A broker-dealer, whether or not registered with the SEC.
- A trust with total assets in excess of $5 million.
- A private business development company.
- An organization with assets exceeding $5 million, and that was not formed for the purpose of investing in the particular offering being made.
Accredited investors have access to a wider range of investment opportunities than retail investors. This includes private equity, venture capital, and hedge funds, which can offer the potential for higher returns but also come with greater risk.
It is important to note that accredited investor status does not guarantee investment success. Investors should always do their own research and understand the risks involved before investing in any security
SEC GUIDELINES for Accredited Investor
