Under the Securities Act of 1933,
any company that sells securities must register with the SEC or file for an
exemption if they so qualify. The Act
provides companies with a number of exemptions from federal registration
requirements. One of these exemptions is
that the company may sell its securities to Accredited
Investors. Selling securities to Accredited Investors is deemed to be an
exemption because the assumption is that Accredited
Investors have the skill and knowledge to evaluate and determine the risk
of the investment.
The term Accredited Investor is defined by the Securities and Exchange
Commission (SEC) and is used to describe investors who
have achieved a level of financial sophistication that eliminates or diminishes
the need for protection that some government filings may provide.
An Accredited Investor is: