Broker Check

Accredited Investor Definition

Accredited investor is a wealthy investor who meets certain SEC requirements for net worth and income as they relate to some restricted offerings. Accredited investors include institutional investors, company directors and executive officers, high net worth individuals, and certain other entities. Some limited partnerships and angel investor networks accept only accredited investors.

The federal securities laws define the term accredited investor in Rule 501 of Regulation D as any person who comes within any of the following categories:

  1. 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. The person's primary residence shall not be included as an asset;
  2. 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;
  3. a charitable organization, corporation, or partnership with assets exceeding $5 million not formed for the specific purpose of acquiring the securities offered;
  4. a director, executive officer, or general partner of the issuer of the securities being sold or offered;
  5. a business in which all the equity owners are accredited investors;
  6. 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;
  7. a trust with assets in excess of $5 million, not formed to acquire the securities offered, whose purchases a sophisticated person makes.