Last Updated on March 27, 2023 by John Fischer

The U.S. Securities and Exchange Commission (SEC) defines accredited investors as individuals or entities that meet certain financial requirements, allowing them to invest in certain private securities offerings. The purpose of these requirements is to ensure that investors have the necessary financial sophistication to evaluate the risks and benefits of these investments.

The current SEC definition of accredited investors includes the following:

Individuals with a net worth of at least $1 million, excluding the value of their primary residence, or

Individuals with income of at least $200,000 in each of the two most recent years (or $300,000 jointly with a spouse) and with a reasonable expectation of reaching the same income level in the current year, or

Certain entities, including banks, insurance companies, registered investment companies, and private business development companies, among others, that meet certain asset thresholds.

In addition to these requirements, the SEC may also recognize other categories of accredited investors, including those with certain professional certifications or expertise, in order to expand the pool of eligible investors.

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