What Is an
Accredited Investor?
You may already qualify. Below is a summary of who qualifies as an accredited investor under the SEC's Rule 501(a) of Regulation D.
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Three Categories, Three Unique Qualifications
Accredited individuals or entities have the financial sophistication and means to bear the risks of investing in complex, unregistered securities.
Individuals
Individuals qualify if they meet the following criteria:
Net worth over $1 million, alone or with a spouse or spousal equivalent (excluding primary residence), or income over $200,000 individually ($300,000 jointly) in each of the past two years, with a reasonable expectation of the same this year
Professionals
Holders in good standing of a Series 7, 65 or 82 license, certain directors and executive officers of the issuer, and “knowledgeable employees” of private funds.
Entities
Over $5 million in assets (or investments, for certain entity types), or all equity owners are accredited investors.
Three Ways to Verify Accreditation
Phoenix Energy
Submit tax docs (W-2, 1099 or 1040) for the two most recent years
Submit asset statements – dated within 90 days
CPA/Attorney
Submit accreditation letter:
Verifier’s name, license, contact info and confirmation of income or net worth – dated within 90 days
Third-Party Verifier
Example services:
Rate Lifts on REG D Private Placement
Rate Lifts on Larger Private Placement Investments
Get Up to a 1% Rate Lift1
9 Mistakes to Avoid
Using Outdated Documentation
Asset statements and verification letters older than 90 days won’t be accepted.
Undervaluing Non-Cash Assets
Investors often forget to include things like retirement accounts, private stock, or vested options in their net worth calculation.
Sending Incomplete Tax Records
For income-based verification, you must provide full tax returns (Form 1040) or W-2/1099s for two years — partial documents aren’t enough.
Assuming Professional Licenses Don’t Count
Holders of a Series 7, 65 or 82 license in good standing often don’t realize it can qualify them on its own — no income or net worth proof needed, just confirmation that the license is active.
Including Primary Residence in Net Worth
Primary residence cannot be counted toward the $1 million net worth requirement. Many people accidentally include home equity.
Ignoring Alternative Paths to Accreditation
Beyond income and net worth, you may qualify through other routes — such as combined finances with a spousal equivalent, or investing through an entity owned entirely by accredited investors.
Not Matching Names Across Documents
All documents must show the same full legal name as on your application — mismatched names slow or disqualify the process.
Missing or Incomplete Verifier Info on Letters
CPA or attorney letters must include the verifier’s name, license number, state of licensure, contact info, and signature.
Submitting Personal Docs for Entity Accreditation
If applying via a business or trust, documentation must prove the entity’s assets or structure, not just the individual’s.
