Who is an “accredited investor”?

When we talk about private individuals, an accredited investor is the one who either

 

a) has a net worth of at least one million US dollars, excluding the value of his/her primary residence, or

b) had income at least $200,000 each year for the last two years (or $300,000 combined income if married) and has the expectation to make the same amount this year; or

c) a director, executive officer, or general partner of the company selling the securities.

 

The term "accredited investor" is defined in Rule 501 of Regulation D of the U.S. Securities and Exchange Act as:

 

1    a bank, insurance company, registered investment company, business development company, or small business investment company;

2    an employee benefit plan, within the meaning of the Employee Retirement Income Security Act, if a bank, insurance company, or registered investment adviser makes the investment decisions, or if the plan has total assets in excess of $5 million;

3    a charitable organization, corporation, or partnership with assets exceeding $5 million;

4    a director, executive officer, or general partner of the company selling the securities;

5    a business in which all the equity owners are accredited investors;

6    a natural person who has individual net worth, or joint net worth with the person's spouse, that exceeds $1 million at the time of the purchase, or has assets under management of $1 million or above, excluding the value of the individual's primary residence;

7    a natural person with income exceeding $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year; or

8    a trust with assets in excess of $5 million, not formed to acquire the securities offered, whose purchases a sophisticated person makes."

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