Fed Chairman Jerome Powell faces the tough challenge of presenting a unified voice on Fed policy from the most divided Fed in years.Market Insiderread more
Boris Johnson will be meeting President Donald Trump to discuss a potential post-Brexit trade deal just as he tries to court EU leaders for a new withdrawal agreement.World Politicsread more
U.S. Secretary of State Mike Pompeo says Huawei CFO Meng Wanzhou, who is under house arrest in Canada and facing extradition to America, is not a bargaining chip in the trade...Technologyread more
Arturo Estrella has a message for recession naysayers: It could hit sooner than you think.Marketsread more
Accountants in Hong Kong took to the streets on Friday to call for the government to accept five demands of the people, including the complete withdrawal of a now-suspended...China Politicsread more
Recent trade friction between the two Asian powerhouses has morphed into a dispute with political implications that go far beyond the region.Asia Politicsread more
Local governments commonly share single service providers, making many vulnerable at once. On top of this, ransomware has often been used to mask more targeted, malicious...Technologyread more
The unlikely alliance would in theory enjoy a relatively comfortable majority in the parliament's lower house but would rely on a handful of sympathetic but unaligned...Europe Politicsread more
Bank Indonesia on Thursday cut its key policy rate by 25 basis points to 5.5% to support growth amid an increasingly fragile global economy.Central Banksread more
Meanwhile, investors look ahead to Fed Chair Jerome Powell's speech at a yearly central banking symposium in Jackson Hole, Wyoming.Asia Marketsread more
The U.S Energy Information Administration (EIA) says Australia is on track to consistently export more LNG than Qatar.Oil and Gasread more
The Securities and Exchange Commission allows certain securities offered by companies and private funds to be exempt from registration as long as they are only offered to, or purchased by, accredited investors. These securities can include hedge funds, venture capital funds, and companies raising capital in the burgeoning sector of equity crowdfunding.
But what, or who, is an accredited investor?
Simply put, an accredited investor is someone who the SEC deems capable of taking on the economic risk of investing in unregistered securities. Entities may also be deemed accredited investors, including banks, partnerships, corporations, nonprofits and trusts.
The accredited-investor guidelines are intended to identify, in a value-neutral way, who is a "sophisticated" investor with sufficient knowledge and experience in financial and business matters to evaluate the merits and risks of the prospective investment.
The SEC specifically defines an accredited investor based on income and net-worth tests.
To be an accredited investor, an individual must have had 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 year," according to the SEC.
Or, the individual must have a net worth of more than $1 million, either alone or together with a spouse. With the passage of the Dodd-Frank Act, this now excludes a primary residence as being eligible as part of an investor's net worth (investors who had existing accredited investments but who now fail the net-worth test without their residence being valued were grandfathered).
The income test cannot be met using one year of an individual's 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 SEC offers an explanatory table to help investors determine if they meet the accredited-investor guidelines.
More changes to the accredited-investor standards may be forthcoming. The SEC has been debating tougher standards for accredited investors as part of the mandate in the Dodd-Frank Act to review the existing accredited investor rule. There has also been debate about whether the SEC should consider non-financial standards for accredited investors, such as education or professional background.
The Jumpstart Our Business Startups (JOBS) Act has also played a major role in changing the landscape for private investments and investor access to these offerings.
In late 2013 the SEC removed a ban on advertising by private placements offered to accredited investors, including the Internet, social media, seminars, print, or radio or television broadcast, under Rule 506(c).
Currently under review—and already delayed by the SEC from the original implementation plan—is a rule that would allow non-accredited investors (i.e., anyone) to invest in crowdfunded offerings, per the JOBS Act Title III, which covers equity crowdfunding, and the SEC's proposed Regulation Crowdfunding. Some U.S. states have enacted their own equity crowdfunding statutes as a way to circumvent the ongoing SEC review period.