Accredited investors form part of an elite group of carefully selected individuals who have the ability to invest in anything they choose, are considered sophisticated in the investment industry and are financially secure enough to take the risk of an investment failure. This group of individuals is allowed by the SEC to take part in private offerings that are not available to the general public. An example of this investment in the Reg. D, Rule 506c offerings that are exclusive to SEC accredited investors.
Definition of an SEC Accredited Investor
An SEC accredited investor is defined as accredited if their annual income exceeds $200,000 or $300,000 joint income with a spouse over the immediate past two years and anticipate their income, for at least the current year, to remain at that level. Investors with a net worth of over one million dollars are also considered accredited.
IMPENDING CHANGES BY THE SEC
With the recent JOBS Act that has been passed, pending SEC Crowd Funding rules and the creation of Reg. D Rule 506 the SEC is in the process of considering changes to the minimum requirements that define an accredited investor. The minimum requirements have not changed in any significant way for over 30 years and therefore they have not been keeping pace with inflation. For example, in the 1980’s an individual with an income of $200,000 was considered well-off, but in 2014 most families need this much income just in order to sustain themselves in major metropolitan areas like New York or Los Angeles. With the rise in the cost of living the concern from the SEC’s point of view is that if the existing requirements are followed, many families will invest who may not be able withstand the risk which is one of the primary criteria for creating a list of specific investors in the first place.
The current net worth and income criteria includes over 8.5 million people in the U.S. who are considered by the SEC to be accredited investors. If a change in the minimum requirements should take place this number could drop to about 3.7 million, a drastic reduction that will severely stem the flow of capital to companies who are making use of private offerings to raise needed capital. This anticipated action by the SEC is of great concern to many broker dealers, companies and crowd-funding platforms. The reason for the JOBS Act was to increase the ability of companies to access capital and not restrict it and if the SEC should change the standards it would have the opposite effect.
If you are looking to raise capital by using a private offering, you should launch your campaign without waiting for the SEC to make a move. The workings are notoriously slow from the SEC and if you launch your campaign to invest capital now, the investor pool will still be large. Purchasing an SEC accredited investors leads list will help you target your specific market and ensure that your offering will reach the right investors. Contact us at the number to the right or fill out the form on this page to receive your first 50 leads for Free.