An individual or entity meeting specific financial criteria, allowing investment in unregistered securities.
Description
An accredited investor, as defined by the U.S. Securities and Exchange Commission (SEC) under Regulation D, is an individual or entity that meets certain financial thresholds, such as an annual income exceeding $200,000 ($300,000 joint income with a spouse) for the past two years or a net worth over $1 million, excluding the primary residence. This status permits participation in private investment opportunities, such as hedge funds, private equity, and venture capital, which are typically unregistered with the SEC and carry higher risk. Family offices often qualify as accredited investors, enabling them to diversify portfolios with alternative assets. The designation ensures investors have the financial sophistication and capacity to absorb potential losses.
