Definition of Accredited Investor under Regulation D, Securities Act of 1933

Under the Securities Act of 1933, a company that offers or sells its securities must register the securities with the SEC or find an exemption from the registration requirements. The Act provides companies with a number of exemptions. For some of the exemptions, such as rules 505 and 506 of Regulation D, a company may sell its securities to what are known as "accredited investors." The federal securities laws define the term-accredited investor in Rule 501 of Regulation D as:

 

  1. A bank, insurance company, registered investment company, business development company, or small business investment company

  2. An employee benefit plan, within the meaning of the Employee Retirement Income Security Act, if a bank, insurance company, or registered investment adviser makes the investment decisions, or if the plan has total assets in excess of $5 million

  3. A charitable organization, corporation, or partnership with assets exceeding $5 million

  4. A director, executive officer, or general partner of the company selling the securities

  5. A business in which all the equity owners are accredited investors

     

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