The Securities and Exchange Commission (SEC) was created after the 1929 financial crisis brought chaos to US investors. The commission’s primary goal is to protect unsophisticated investors from participating in investment opportunities that they might not understand or from taking on too much risk without adequate information. Accordingly, it created a category of investor referred to as accredited, which means the individual (or entity) is eligible to invest in a broader range of investment options than others. In order to be considered accredited, an investor must meet at least one of the following qualifications:
Have an annual income of over $200,000 ($300,000 with a partner) for at least two previous years and an expectation of the same for the current year.
Have a personal or joint net worth of over $1 million, excluding the value of the primary residence. For entities, the minimum net worth is $5 million.
Be an investment professional holding an appropriate license such as Series 7, Series 65, or Series 62.
Investors who qualify by these criteria can be accredited for most restricted offerings. However, it’s important to note that the company or entity offering the investment decides which investors qualify. While these are among the common means of being accredited, the