accredited investor definition

The Securities and Exchange Commission (SEC) defines an individual accredited investor as a person with over a $1 million net worth and/or whose income is at least $200,000 ($300,000 jointly with a spouse) in each of the two most recent years and a reasonable expectation of that income continuing. Venture funds and certain banks or institutions may also qualify as accredited investors.

The application of this investor designation, under Rule 501(a) of Regulation D of the Securities Act of 1933, is to limit the sale of certain more risky securities or investments to only those investors who, by virtue of their wealth and income, are less likely to suffer substantially from the loss of that investment.

Securities law is complex. Any business or individual seeking to raise money through the sale of equity should first obtain competent legal counsel.