A qualified investor, sometimes referred to as an “accredited investor,” is someone deemed to have sufficient financial awareness, capital and sophistication to be excluded from certain U.S. regulations that are designed to protect most investors.
Simply put, a qualified or accredited investor has financial means or knowledge to take investment risks, including income, net worth, asset size, governance status or professional experience.
- To qualify as an accredited investor, a person must be able to demonstrate an annual income of $200,000, or $300,000 for joint income (for the last 2+ years) with the same future earning potential or higher income.
- A person is also considered an accredited investor if he has a net worth exceeding $1 million (exclusive of permanent residence).
Energy Partner’s Fund-IX is a private placement offering having filed Form D, Rule 506 with the SEC. Under this rule, EPF-IX may offer and sell securities to an unlimited number of “accredited investors” (generally wealthy or institutional investors, as defined by Rule 501(a) of Regulation D) and to no more than 35 non-accredited investors who meet certain “sophistication” requirements.
Therefore, the requirement that EPF-IX must take “reasonable steps” as issuer to verify a purchaser’s status based on the type of Accredited Investor that the purchaser claims to be.