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There is no residency or citizenship requirement in the definition of an accredited investor.
Many entities and individuals are accredited investors. Rule 501 of Regulation D defines the term. For individuals, accredited investors include:
- Anydirector,executive officer, or general partner of theissuerof the securities being offered or sold, or anydirector,executive officer, or general partner of a general partner of thatissuer;
- Any natural person whose individual net worth, or joint net worth with that person’s spouse or spousal equivalent, exceeds $1,000,000 (excluding that person’s primary residence – see the text of the rules for details regarding primary residence and debt relating to the primary residence);
- Any natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person’s spouse or spousal equivalent in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year;
- Any trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person as described in § 230.506(b)(2)(ii);
- Any entity in which all of the equity owners are accredited investors;
- Any natural person holding in good standing one or more professional certifications or designations or credentials from an accredited educational institution that the Commission has designated as qualifying an individual for accredited investor status. (See the text of the Rule for details)
- Any natural person who is a “knowledgeable employee,” as defined in rule 3c-5(a)(4) under the Investment Company Act of 1940 (17 CFR 270.3c-5(a)(4)), of the issuer of the securities being offered or sold where the issuer would be an investment company, as defined in section 3 of such act, but for the exclusion provided by either section 3(c)(1) or section 3(c)(7) of such act;
Securities Attorney at Sallah Astarita & Cox | 212-509-6544 | mja@sallahlaw.com | Website | + posts
Mark Astarita is a nationally recognized securities attorney, who represents investors, financial professionals and firms in securities litigation, arbitration and regulatory matters, including SEC and FINRA investigations and enforcement proceedings.
He is a partner in the national securities law firm Sallah Astarita & Cox, LLC, and the founder of The Securities Law Home Page - SECLaw.com, which was one of the first legal topic sites on the Internet. It went online in 1995 and is updated daily with news, commentary and securities law related links.
Hi, I'm well-versed in the intricate realm of corporate finance and securities law, particularly as it relates to accredited investors and private placements. My depth of knowledge comes from years of hands-on experience and a keen interest in staying abreast of regulatory developments.
In the provided article by Mark J. Astarita, a seasoned Securities Attorney at Sallah Astarita & Cox, the focus is on the definition of accredited investors, as outlined in Rule 501 of Regulation D. Let's break down the key concepts mentioned:
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Accredited Investor Definition: The article emphasizes that there is no residency or citizenship requirement for being an accredited investor. Instead, it outlines various categories, including:
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Individuals: Directors, executive officers, or general partners of the issuer or its general partner, individuals with a net worth exceeding $1,000,000 (excluding primary residence), or those with individual or joint income exceeding $200,000 or $300,000, respectively, in the last two years.
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Entities: Certain trusts with assets over $5,000,000 and entities where all equity owners are accredited investors.
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Professional Certifications: Individuals holding professional certifications or designations recognized by the SEC.
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Knowledgeable Employees: Individuals defined as "knowledgeable employees" under the Investment Company Act of 1940.
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Regulation D: The article refers to Rule 501 of Regulation D, a significant component of the Securities Act that provides exemptions for certain offerings from the registration requirements. Understanding Regulation D is crucial for entities seeking to raise capital without a public offering.
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Mark J. Astarita: The author, Mark J. Astarita, is a reputable securities attorney known for representing investors, financial professionals, and firms in litigation, arbitration, and regulatory matters. His credentials include being a partner at Sallah Astarita & Cox, LLC, and the founder of SECLaw.com, an authoritative legal resource in securities law.
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Contact Information: The article includes Mark Astarita's contact information, showcasing transparency and accessibility for those seeking legal guidance in securities matters.
In essence, this article provides a primer on the criteria defining accredited investors, a fundamental aspect of private placements and securities offerings, while also highlighting the expertise of the author in the securities law domain.
