An accredited investor, in the context of a natural person, includes anyone who:
💡 Has earned income that exceeded $200,000 (or $300,000 together with a spouse) in each of the prior two years, and reasonably expects the same for the current calendar 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 good standing a Series 7, 65 or 82 license
💡 On the income test, the person must satisfy the thresholds for the prior two years consistently either alone or with a spouse, and cannot, for example, satisfy one year based on individual income and the next two years based on joint income with a spouse. The only exception is if a person is married within this period. The person may satisfy the threshold on the basis of joint income for the years during which the person was married and on the basis of individual income for the other years.
💡 In addition, entities such as banks, partnerships, corporations, nonprofits and trusts may be accredited investors. Of the entities that would be considered accredited investors and depending on your circumstances, the following may be relevant to you:
→ Any trust with total assets in excess of $5 million, not formed to specifically purchase the subject securities, and whose purchase is directed by a sophisticated person, OR
→ Certain entity with total investments in excess of $5 million, not formed to specifically purchase the subject securities, OR
→ Any entity in which all the equity owners are accredited investors.
→ In this context, a sophisticated person means the person must have, or the company or private fund offering the securities reasonably believes that this person has, sufficient knowledge and experience in financial and business matters to evaluate the merits and risks of the prospective investment.
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