An
accredited investor is an individual or entity that meets certain financial criteria defined by the U.S. Securities and Exchange Commission (SEC). These criteria ensure that the investor has sufficient financial resources, knowledge, and experience to bear the risks associated with investing in unregistered securities, such as private equity, hedge funds, and real estate syndications.
Criteria for Individual Investors
To qualify as an accredited investor, an individual must meet at least one of the following:
1. Income Test:
• Have an annual income of $200,000 (or $300,000 jointly with a spouse or spousal equivalent) for the past two years, with a reasonable expectation of maintaining the same income level in the current year.
2. Net Worth Test:
• Have a net worth of at least $1 million, either individually or jointly with a spouse or spousal equivalent, excluding the value of the primary residence.
3. Professional Certifications (as of recent updates):
• Hold certain professional certifications, designations, or credentials recognized by the SEC, such as a Series 7, Series 65, or Series 82 license.
4. Knowledgeable Employee:
• Be a “knowledgeable employee” of a private fund, such as an officer, director, or trustee involved in the fund’s management.