Accredited Investor

Full Definition

Under SEC regulations, accredited investors are deemed financially sophisticated enough to understand and bear the risks of unregistered securities. Individuals qualify with annual income exceeding $200,000 ($300,000 joint) for the past two years, or net worth over $1 million excluding primary residence. Certain entities, licensed professionals, and company insiders also qualify. Most Reg D offerings are limited to accredited investors.

Qualification Criteria

Individuals qualify if they meet ANY of these:

• Annual income over $200,000 ($300,000 with spouse) for past 2 years with reasonable expectation of the same
• Net worth over $1 million (excluding primary residence)
• Holder of Series 7, 65, or 82 licenses
• Director, executive officer, or general partner of the issuer
• "Knowledgeable employees" of private funds

Entities qualify if they:

• Have assets over $5 million (for trusts and other entities)
• Are banks, insurance companies, or registered investment companies
• Are family offices with $5M+ in assets
• Are entities owned entirely by accredited investors

Why It Matters

US securities laws require Reg D 506(c) offerings to verify that all investors are accredited. This isn't just a checkbox—it's a legal requirement with real consequences for issuers who get it wrong.

Sails.to works with third-party verification services to confirm accredited status during KYC. Non-US investors may qualify under Reg S without meeting US accreditation thresholds, instead qualifying as professional investors under their local regulations.

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