Regulation D Private Placements: Accredited Investor Financial Thresholds
Under SEC Regulation D Rule 501, which of the following natural persons satisfies the financial test to qualify as an 'Accredited Investor' for purchasing unregistered private placement securities?
Natural person accredited thresholds: (1) Income > $200,000 alone or > $300,000 with spouse in each of last 2 years, OR (2) Net worth > $1,000,000 EXCLUDING primary residence.
Complete Analysis & Legal Rationale
SEC Rule 501 defines accredited investors for private placements (Reg D): For natural persons: (1) Earned income exceeding $200,000 in each of the two most recent tax years (or $300,000 combined joint income with a spouse/partner) with a reasonable expectation of reaching the same income in the current year; OR (2) Individual or joint net worth exceeding $1,000,000, EXCLUDING the value of the individual's primary residence (the Dodd-Frank net worth rule); OR (3) Holding Series 7, 65, or 82 licenses in good standing.
Distractor Autopsy (Why Other Options Are Traps)
FINRA exam writers design incorrect distractors using specific calculation mistakes and regulatory misconceptions. Review why each option succeeds or fails:
Natural person accredited thresholds: (1) Income > $200,000 alone or > $300,000 with spouse in each of last 2 years, OR (2) Net worth > $1,000,000 EXCLUDING primary residence.
Fails to adhere to suitability standards regarding B.
Fails to adhere to suitability standards regarding C.
Fails to adhere to suitability standards regarding D.
Official Standard: SEC Rule 501 defines accredited investors for private placements (Reg D): For natural persons: (1) Earned income exceeding $200,000 in each of the two