Accredited investor


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Accredited investor

Refers to an individual whose net worth, or joint net worth with a spouse, exceeds $1,000,000; or whose individual income exceeded $200,000 or whose joint income with a spouse exceeded $300,000 in each of the 2 most recent years and can be expected to meet that income in the current year. More details of the definitions for investors other that individuals are found in Regulation D of the Securities and Exchange Commission.

Accredited Investor

An investor with a net worth of more than $1 million or who has had an annual income of more than $200,000 ($300,000 with a spouse) in each of the past two years. Under Regulation D, accredited investors are exempt from the requirement that no more than 35 investors are allowed to participate in the private placement of a security, company, or hedge fund. As a result, many investment vehicles target high net-worth individuals.

accredited investor

An investor with sufficient income or wealth to be exempted from the 35-person limit in contributing funds to a private limited partnership. An accredited investor must have an annual income of more than $200,000 or a net worth of $1 million, or the investor must purchase $150,000 or more of the offering with the investment representing 20% or less of his or her net worth.

Accredited investor.

An accredited investor is a person or institution that the Securities and Exchange Commission (SEC) defines as being qualified to invest in unregistered securities, such as privately held corporations, private equity investments, and hedge funds.

The qualification is based on the value of the investor's assets, or in the case of an individual, annual income.

Specifically, to be an accredited investor you must have a net worth of at least $1 million or a current annual income of at least $200,000 with the anticipation you'll earn at least that much next year. If you're married, that amount is increased to $300,000.

Institutions are required to have assets worth $5 million to qualify as accredited investors. The underlying principle is that investors with these assets have the sophistication to understand the risks involved in the investment and can afford to lose the money should the investment fail.

References in periodicals archive ?
This Note examines potential changes to the accredited investor definition and how these changes will likely impact entrepreneurs and small businesses relying on the NC PACES Act.
We will continue to deliver quality product for the portfolios of large institutional players and the thousands of accredited investors who invest in our loans every day.
2187 reflected the House's impatience with the SEC's failure to revise the accredited investor definition to increase the potential pool of investors for the private placement market.
Vass said that his economic research on accredited investor crowdfunding leads him to the conclusion that the new method of raising capital will require extensive front end marketing and media relations for small firms that want to undertake a private placement.
When Congress removed the ban on general solicitation" under Rule 506 offerings under Regulation D, Roper said, the accredited investor definition "divide in the public and private markets became more important.
Under the JOBS Act, the SEC is required to amend its roles so that general solicitation and advertising of Rule 506 offerings will be permitted, so long as sales are made only to accredited investors, which will certainly make it easier for companies to attract attention and increase the potential pool of investors.
The SEC is to apply three factors in determining whether to modify the definition of accredited investor for individuals.
On December 27, 2006, the Commission released proposed revisions to its accredited investor definition.
Copies of the Accredited Investor Motion and the Accredited Investor Order are available (a) free of charge on the website of the Subscription Agent, The Garden City Group, Inc.
One area, White said, "is actually in the area that is regulated, which is the reasonable efforts that issuers have to make to determine that who they're selling to are accredited investors and either just not doing it at all or doing a job that clearly doesn't pass muster.
Additionally, so-called investor protection advocates may prevail in ascribing a more restrictive definition of an accredited investor.
Endowments, corporations and employee benefit plans can also qualify for accredited investor status if the plan has at least $5 million in assets; that number drops to $3 million for charitable organizations.

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