What is an accredited investor?

The definition of “accredited investor” can be found in Regulation D under the Securities Act of 1933. There are several different ways to be qualified as an accredited investor. These include:

• Individuals with a pre-tax income exceeding $200,000 annually ($300,000 per couple) with the expectation of that continuing in the next year;
• Individuals having a net worth of more than $1 million, excluding the value of a primary residence;
• Individuals holding certain professional certifications, designations, and licenses that are active and in good standing (FINRA Series 7, Series 82, Series 65 holders);
• Entities owning more than $5,000,000 in “investments” (as defined in the Investment Company Act of 1940), not formed for the specific purpose of acquiring the subject securities;
• Entities in which all equity owners are accredited; and
• Trusts with total assets in excess of $5,000,000 not formed for the specific purpose of acquiring the subject securities and whose purchase is directed by a “sophisticated person” as defined in Regulation D.

For the full definition of “accredited investor” please see 17 CFR § 230.501(a).

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