The term “Accredited Investor” is defined by the Securities and Exchange Commission. It is a term for individuals wishing to purchase securities which are not required to be registered with the SEC or any State Securities Division. In addition, the term “Accredited Investor” is meant to apply to certain individuals who may not, based upon their asset and income level, as well as their sophistication when it comes to investing and markets, need the added protections that were meant by the Securities Act of 1933.
The term “Accredited Investor” is defined in Rule 501 of Regulation D by the SEC. To become qualified as an Accredited Investor, one must have annual income exceeding $200,000 per year, or $300,000 per year for joint income, for the last two years. In addition, a person can also be considered an accredited investor if their net worth exceeds $1 million.
Again, the purpose of the Securities Act of 1933 and the Securities and Exchange Act of 1934 were to protect the investing public following the Stock Market Crash of 1929 and the ensuing Great Depression. However, under Rule 501 of Regulation D, the SEC provides an avenue for investors of a certain income, asset level, and investing sophistication to purchase unregistered securities that would otherwise be unlawful under the 1933 and 1934 acts.
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If you have questions related to Securities Law, Private Equity Funds, Hedge Funds, and compliance with Rule 501 of Regulation D, please contact our office at (513) 241-0400. You can also fill out the contact form on our website and one of our attorneys will follow up shortly.