Accredited Investor

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Under federal law, an accredited investor is a special kind of investor that due to certain special circumstances or qualities - as the ones indicated in Rule 501 of Regulation D - is allowed to purchase or be offered to purchase unregistered securities. This is an exemption, as under federal securities law, no securities may be sold or offered for sale unless they are registered or unless there is an exemption.

List of accredited investors:

  • Banks
  • Savings and loan associations
  • Brokers or dealers
  • Investment advisors
  • Insurance companies
  • Business development company
  • Small Business Investment Company
  • Rural Business Investment Company
  • State plans for the benefit of its employees (with total assets more than $ 5,000,000)
  • Employment benefit plan (by plan fiduciary)
  • Private business development company
  • Any tax-exempted organization under section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, partnership, or limited liability company, not formed for the specific purpose of acquiring the securities offered, with total assets more than $5,000,000
  • Any director, executive officer, or general partner of the issuer of the securities being offered or sold, or any director, executive officer, or general partner of a general partner of that issuer
  • Natural persons with individual net worth, or joint net worth with spouse of partner, exceeds $1,000,000
  • Natural persons with individual income more than $200,000 in each of the two most recent years, or joint income more than $300,000
  • Trusts, with total assets more than $5,000,000
  • Entities in which all the equity owners are accredited investors themselves.
  • Other entities, not formed for the specific purpose of acquiring the securities offered, owning investments more than $5,000,000.
  • Natural persons who hold one or more of the following accreditations: (i) Licensed General Securities Representative (Series 7); (ii) Licensed Investment Adviser Representative (Series 65); and (iii) Licensed Private Securities Offerings Representative (Series 82)
  • Natural persons who are “knowledgeable employees” of the issuer of the securities being offered or sold where the issuer would be an investment company.
  • Any “family office” with assets under management more than $5,000,000, not formed for the specific purpose of acquiring the securities offered, and directed by an experienced professional.
  • Any “family client” of a family office and whose prospective investment in the issuer is directed by such family office.

See also: private placement; registration statement; Securities and Exchange Commission (SEC)

For additional information on accredited investors click here

[Last updated in January of 2022 by the Wex Definitions Team]