Definition of a Sophisticated and Accredited Investor

1. Sophisticated Investor (U.S. context – typically under Regulation D, Rule 506(b))

A sophisticated investor is someone who has enough knowledge and experience in financial and business matters to evaluate the risks and merits of an investment…

Not officially defined as strictly as “accredited,” but used in contexts where companies can sell securities to up to 35 non-accredited but sophisticated investors…

2. Accredited Investor (as defined by the U.S. Securities and Exchange Commission – SEC)

An accredited investor is a person or entity that meets at least one of the following financial or professional criteria…

Individual Accredited Investor Criteria:

Must meet at least one of the following:

• Income Test:
  Earned $200,000 (individual) or $300,000 (jointly with spouse or spousal equivalent)…
• Net Worth Test:
  Has a net worth over $1 million, excluding the value of primary residence…
• Professional Certification:
  Holds licenses such as Series 7, Series 65, or Series 82.
• Knowledgeable Employees:
  Certain employees of private funds may qualify based on roles.