Under Federal Legislation regulated by the U.S. Securities and Exchange Commission (SEC), an accredited investor is classified as an individual or business entity that can legally trade in securities.
Regulators have strict guidelines on who can be considered an accredited investor. Under new legislation passed in late 2020 by the SEC, individuals can now qualify as an accredited investor “based on measures of professional knowledge, experience or certifications in addition to the existing tests for income or net worth.”
To be considered an accredited investor, individuals will need to provide substantial proof that personal net worth exceeds the $1 million threshold. Additionally, accredited investors can also be people who are legally married and have a joint net worth that meets SEC standards. Total net worth should include all current assets that exceed the greater of $1 million. And these assets exclude the primary residence and the value thereof.
Private companies can offer securities for investment that are not available to the general public.
There are also additional private investment securities that can be accessed by accredited investors.
Get more details about becoming an accredited investor.
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