Definition of Accredited Investors

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    It’s estimated that 10.6% of all American households—roughly 10 million households—qualified as accredited investors in 2020.[1] Accredited investors have access to a broad array of investment options that the remaining 89.4% of US households do not.

    Accredited Investors Definition

    The SEC defines an accredited investor in Rule 501[2] as:

    1. Net worth over $1 million, excluding primary residence (individually or with spouse or partner).
    2. Income over $200,000 (individually) or $300,000 (with spouse or partner) in each of the prior two years, and reasonably expects the same for the current year.
    3. Entities where all equity owners are accredited investors.
    4. Entities owning investments in excess of $5 million
    5. 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.
    6. A bank, savings and loan association, insurance company, registered investment company, business development company, or small business investment company or rural business investment company.
    7. 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).
    8. Directors, executive officers, or general partners (GP) of the company selling the securities (or of a GP of that company).
    9. Any “family client” of a “family office” that qualifies as an accredited investor.
    10. For investments in a private fund, “knowledgeable employees” of the fund.
    11. Investment advisers (SEC- or state-registered or exempt reporting advisers) and SEC-registered broker-dealers.

    [1] https://dqydj.com/accredited-investors-in-america/.

    [2] https://www.sec.gov/education/capitalraising/building-blocks/ accredited-investor#~:text=Financial%20Criteria,same%20for%20the%20current%20year

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