Accredited Investor

How can individuals qualify as accredited?

An accredited investor, in the context of a natural person, includes anyone who:

• earned income that exceeded $200,000 (or $300,000 together with a spouse or spousal equivalent) in each of the prior two years, and reasonably expects the same for the current year, OR
• has a net worth over $1 million, either alone or together with a spouse or spousal equivalent (excluding the value of the person’s primary residence), OR
• holds in good standing a Series 7, 65 or 82 license.

How do I calculate my net worth?

Generally, to qualify as an accredited investor under the net worth test, you must have a net worth that exceeds $1 million, either alone or with a spouse or spousal equivalent, at the time of the sale of the securities. If calculating joint net worth with a spouse or spousal equivalent, it is not necessary that property be held jointly and the securities being purchased do not have to be acquired jointly. Calculating net worth involves adding up all your assets and subtracting all your liabilities. The resulting sum is your net worth.

The value of your primary residence is not included in your net worth calculation.

How can entities qualify as accredited?

Depending upon the structure of the entity or its assets, entities may qualify as an accredited investor.

Investments
Entities owning investments in excess of $5 million

Assets
The following entities with assets in excess of $5 million: corporations, partnerships, LLCs, trusts, 501(c)(3) organizations, employee benefit plans, “family office” and any “family client” of that office

Owners as Accredited
Entities where all equity owners are accredited investors

Investment Advisers
Investment advisers (SEC- or state-registered or exempt reporting advisers) and SEC-registered broker-dealers

Financial Entities
A bank, savings and loan association, insurance company, registered investment company, business development company, or small business investment company or rural business investment company