under Rule 501 of Securities and Exchange Commission Regulation D, a wealthy investor who does not count as one of the maximum of 35 people allowed to put money into a private limited partnership. Private limited partnerships use accredited investors to raise a larger amount of capital than would be possible if only 35 less wealthy people could contribute. To qualify as an accredited investor, an individual must (1) earn an individual income of more than $200,000 per year, or a joint income of $300,000 in each of the last two years, and expect to reasonably maintain the same level of income; or (2) have a net worth exceeding $1 million, either individually or jointly with his or her spouse; or (3) be a general partner, executive officer, director, or a related combination thereof for the issuer of the security being offered.
under Securities and Exchange Commission Regulation D, Rule 501, an investor wealthy enough to be exempt from registration requirements. Entities need a minimum net worth of $5 million. Individuals or married couples must have a net worth of at least $1 million or annual income of at least $200,000 ($300,000 for couples) for each of the two most recent years and a reasonable expectation of the same income in the current year. For example, private limited partnerships use accredited investors, who must invest at least $150,000, which cannot be more than 20% of net worth, to raise a larger amount of capital than would be possible if only 35 less wealthy people could contribute.
