CandleFocus Glossary Editor
Accreditation by the SEC is determined by the investor’s financial position and its closely related history. The criteria for becoming accredited by the SEC is based off of the investor’s financial stability and covers factors such as their yearly income, net worth and their professional experience. Those individuals who exceed the criteria set forth by the SEC are able to partake in what the SEC has deemed as “sophisticated type of securities”
To qualify as accredited investors, a person must meet at least one of the following criteria. They must either had an income over $200,000 for the past two years or a net worth of over $1,000,000 not including the value of their primary residence. Also, the individual must be a general partner, executive officer, director, or have been in the industry of investing for at least the past two years and their job title must reflect their experience.
Not only is financial stability a requirement to become accredited, but legalities and fiduciary responsibility are also necessary as well. Those searching to become accredited must also prove they are legally able to partake in the securities being offered and must prove that they have adequate understanding of the specifics involved in the investment.
The main reason accredited investors are allowed to partake in unregistered securities is because these investments are deemed to be highly risky and potentially harmful. Due to the lack of disclosure that comes with an unregistered security, it falls upon the investor to do the necessary research and take the proper precaution when it pertains to making their investments. The SEC believes that only accredited investors can bear the risk of such investments and are allowed to partake, as long as they meet the disclosed criteria.
Those investors accredited by the SEC can reap the rewards of financial prosperity and stability by taking advantage of the often untapped market of unregistered securities as long as they are aware of the risks that follow such investments. Those wishing to become accredited have a variety of criteria that must be met, such as yearly income and net worth, before they can take their first steps into the world of accredited investments.
To qualify as accredited investors, a person must meet at least one of the following criteria. They must either had an income over $200,000 for the past two years or a net worth of over $1,000,000 not including the value of their primary residence. Also, the individual must be a general partner, executive officer, director, or have been in the industry of investing for at least the past two years and their job title must reflect their experience.
Not only is financial stability a requirement to become accredited, but legalities and fiduciary responsibility are also necessary as well. Those searching to become accredited must also prove they are legally able to partake in the securities being offered and must prove that they have adequate understanding of the specifics involved in the investment.
The main reason accredited investors are allowed to partake in unregistered securities is because these investments are deemed to be highly risky and potentially harmful. Due to the lack of disclosure that comes with an unregistered security, it falls upon the investor to do the necessary research and take the proper precaution when it pertains to making their investments. The SEC believes that only accredited investors can bear the risk of such investments and are allowed to partake, as long as they meet the disclosed criteria.
Those investors accredited by the SEC can reap the rewards of financial prosperity and stability by taking advantage of the often untapped market of unregistered securities as long as they are aware of the risks that follow such investments. Those wishing to become accredited have a variety of criteria that must be met, such as yearly income and net worth, before they can take their first steps into the world of accredited investments.