Accredited Investor

An accredited investor is an individual or entity that meets certain requirements set by the U.S. Securities and Exchange Commission (SEC) to invest in certain securities offerings that are not registered with the SEC.

Specifically, an accredited investor must meet one of the following criteria:

  • Have an annual income of at least $200,000 (or $300,000 jointly with a spouse) for the past two years and a reasonable expectation of the same income in the current year; OR
  • Have a net worth of at least $1 million, either individually or jointly with a spouse, excluding the value of their primary residence.

Professional Criteria

Investors can also become accredited investors by meeting the following professional criteria

  • Investment professionals in good standing holding the general securities representative license (Series 7), the investment adviser representative license (Series 65), or the private securities offerings representative license (Series 82)
  • Directors, executive officers, or general partners (GP) of the company selling the securities (or of a GP of that company)
  • Any “family client” of a “family office” that qualifies as an accredited investor
  • For investments in a private fund, “knowledgeable employees” of the fund

The SEC has established these criteria to determine whether an investor has the financial sophistication and resources to understand and bear the risks associated with investing in unregistered securities. Accredited investors are permitted to invest in certain private offerings, hedge funds, venture capital funds, and other alternative investments that are not available to non-accredited investors.

How Entities Can Qualify as Accredited Investors

  • Own in excess of $5 million in investments
  • The following entities with assets in excess of $5 million: corporations, partnerships, LLCs, trusts, 501(c)(3) organizations, employee benefit plans, “family office” and any “family client” of that office.
  • All owners are accredited
  • Investment advisers that are state registered or registered with the SEC, and registered broker dealers.
  • A bank, savings and loan association, insurance company, registered investment company, business development company, or small business investment company or rural business investment company


Securities and Exchange Commission on Accredited Investor Definition

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