Are You Accredited?
Certain restricted offerings such as venture capital, hedge funds and private equity investments are required by the Security and Exchange Commission (SEC) to only be presented to qualified and financially sophisticated investors, known as accredited investors. In order to qualify as an accredited investor one must meet one of the following:
1. Any natural person who has (i) an individual net worth, or joint net worth with his or her spouse, of more than $1 million, excluding both the value of your primary residence and the related indebtedness (e.g., mortgage) secured by the primary residence; or (ii) individual income in excess of $200,000, or joint income with his or her spouse in excess of $300,000, in each of the two most recent years and has a reasonable expectation of reaching the same income level in the current year;
Investors should note that indebtedness on their primary residence which exceeds the fair market value of their primary residence, if any, should be considered as a liability and deducted when determining net worth for purposes of the accredited investor definition. In the case of fiduciary accounts, the net worth and/or income requirements must be satisfied by the beneficiary of the account, or by the fiduciary, if the fiduciary directly or indirectly provides funds for the investment.
2. Any corporation, Massachusetts or similar business trust, partnership, or organization described in Section 501(c)(3) of the Code, not formed for the specific purpose of making the investment offered, with total assets over $5 million;
3. Any trust, with total assets over $5 million, not formed for the specific purpose of making the investment offered and whose purchase is directed by a person who has such knowledge and experience in financial and business matters that he or she is capable of evaluating the merits and risks of the investment;
4. Any broker-dealer registered under Section 15 of the Securities Exchange Act of 1934, as amended;
5. Any investment company registered under the Investment Company Act of 1940, as amended, or a business development company (as defined in Section 2(a)(48) of the Investment Company Act);
6. Any small business investment company licensed by the Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958;
7. Any employee benefit plan within the meaning of ERISA, if the investment decision is made by a plan fiduciary (as defined in Section 3(21) of ERISA), which is either a bank, savings and loan association, insurance company, or registered investment advisor, or if the employee benefit plan has total assets over $5 million or, if a self-directed plan, with investment decisions made solely by persons who are accredited investors;
8. Any private business development company (as defined in Section 202(a)(22) of the Investment Advisers Act of 1940, as amended);
9. Any bank as defined in Section 3(a)(2) of the Securities Act, any savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Securities Act whether acting in its individual or fiduciary capacity, or any insurance company as defined in Section 2(13) of the Securities Act;
10. Any plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets of more than $5 million;
11. Any director or executive officer of the Company; or
12. Any entity in which all of the equity owners are accredited investors.
For more information and criteria for accredited status please visit the SEC’s Accredited Investors webpage.
If you are uncertain if you qualify as an accredited investor please feel free to contact us and we will help you to determine your investor status.