Series 79: Rule 501: Definitions

Rule 501: Definitions

Rule 501 defines several terms for Reg D purposes. Of these, the most important is the definition of accredited investor.

Accredited Investor

Under Rule 501(a), an “accredited investor” is any person that actually falls into any of the following categories, or that the issuer reasonably believes comes within any of the categories, at the time of the sale:

• • Large institutional investors, such as banks, savings and loans, registered broker-dealers, insurance companies, mutual funds and other investment companies, and certain employee benefit plans
• • Private business development companies
• • Corporations, partnerships, business trusts, and tax-exempt charitable organizations with assets of more than $5 million
• • The issuer’s directors, executive officers, and general partners
• • Individuals with a net worth of more than $1 million, either alone or jointly with a spouse, not including the value of