Often times we're presented with investment opportunities for accredited investors only.  These opportunities are truly ground floor - often pre-IPO.  Therefore the rewards can be amazingly high.  But so can the risks.  So only accredited or experienced investors are offered these opportunities. 

In the United States, the federal securities laws define the term accredited investor in Rule 501 of Regulation D as:

0. a bank, insurance company, registered investment company, business development company, or small business investment company;
0. 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;
0. a charitable organization, corporation, or partnership with assets exceeding $5 million;
0. a director, executive officer, or general partner of the company selling the securities; 
0. a business in which all the equity owners are accredited investors;
0. 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;
0. 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; or

0. a trust with assets in excess of $5 million, not formed to acquire the securities offered, whose purchases a sophisticated person makes.

For more information about the SEC’s registration requirements and common exemptions, read their brochure, Q&A: Small Business & the SEC.

According to the Ontario Securities Commission in Canada, an accredited investor is:

An individual who, alone or together with a spouse, owns financial assets worth more than $1 million before taxes but net of related liabilities orAn individual, who alone or together with a spouse, has net assets of at least $5,000,000.

An individual whose net income before taxes exceeded $200,000 in both of the last two years and who expects to maintain at least the same level of income this year; or An individual whose net income before taxes, combined with that of a spouse, exceeded $300,000 in both of the last two years and who expects to maintain at least the same level of income this year

An individual who currently is, or once was, a registered adviser or dealer, other than a limited market dealer

Financial institutions

Governments and governmental agencies

Insurance companies

Pension funds

Registered charities

Certain mutual funds, pooled funds and managed accounts

Companies with net assets of at least $5 million

persons or companies recognized by the OSC as an accredited investor

Note: Penny Stock Jockey has provided this information from publicly available sources as a service to our subscribers.  It is neither SECOSC policy nor a legal representation.  Any questions regarding the forgoing should be consulted with a competent securities attorney.