Now that the SEC has removed the ban on advertising private placements (effective September 23rd) people will soon be exposed to this new breed of advertised investment opportunity. This will cause many people to question, can I participate in this investment. The answer to that question will depend on whether they are an ‘Accredited Investor’ as that term is defined by the Securities and Exchange Act.
For a natural person an ‘Accredited Investor’ must meet one of the following criteria: 1) a natural person who has individual net worth, or joint net worth with the person’s spouse, that exceeds $1 million at the time of the purchase, excluding the value of the primary residence of such person; 2) a natural person with income exceeding $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year.
For additional information on the definition of Accredited Investor visit www.sec.gov/answers/accred.htm.