An accredited investor is a term used by the U.S. Securities and Exchange Commission (SEC) under Rule 501 of Regulation D. In order to qualify as accredited, an investor must accomplish at least one of the following:
- Earn an individual income of more than $200,000 per year, or a joint spousal income of more than $300,000 per year, in each of the last two years and expect to reasonably maintain the same level of income
- Have a net worth exceeding $1 million, either individually or jointly with his or her spouse (excluding the primary residence)
- Be a bank, insurance company, registered investment company, business development company, or small business investment company
- Be a general partner, executive officer, director or a related combination thereof for the issuer of a security being offered
- Be a business in which all the equity owners are accredited investors
- Be an employee benefit plan, a trust, charitable organization, partnership, or company with total assets in excess of $5 million
On February 1, 2016, the U.S. House of Representatives approved legislation that expanded the definition of an accredited investor. The legislation allows anyone who ha a securities license or who has professional knowledge and experience related to a specific security to participate in private placements.