Talk:Accredited investor

How are accreditation requirements justified?

I didn't see any mention in the article of why certain high-yield, high-risk investments are restricted to extremely wealthy organizations/individuals. Also, why has the SEC decided to restrict the number of people eligible to invest in these types of things even further? I think this kind of info would make the article more useful. 24.242.236.116 01:43, 25 May 2007 (UTC)

That is true. In general, this article needs work. Feel free to pitch in.--Samiharris 22:18, 31 May 2007 (UTC)

Its a classic, "if you have to ask you can't afford it." accreditation is for high risk investments, or high risk if it takes too large a portion of your investment pie. If you concentrate the kind of money that a private placement requires in one investment it would be by definition very high risk. Being such a large portion of an investors portfolio would make it very inappropriate for lower net worth individuals. No one investment should wipe out a majority of a persons portfolio if it loses all of its value. As a result you have accreditation. —Preceding unsigned comment added by 67.171.161.110 (talk) 19:54, 7 September 2007 (UTC)

No, none of these articles are to protect people who can't afford, they are simply made to restrict participation in derivatives markets to the wealthy because fungibility is limited. As many instruments nowadays threaten to limit fungibility furthermore, they have to extend restrition so the extremely wealthy/investing institution stay able to invest in this business. Protection is a good marketing argument, but has nothing to do with it - everyone was gladly invited to invest 100% of their portfolio into enron, weren't they? Regards, Wolfgang 195.3.113.165 07:57, 30 October 2007 (UTC)

Not that the rule isn't a little weird but it appears to only apply to the first five million in securities according to rule 501 from the SEC's website. I'm not an expert so I'd like further comment but the article should reflect this. Nickjost (talk) 20:23, 16 January 2008 (UTC)

Question about the $200K/$1M Rule

The articel says this rule was put into effect after the SEC act of 1933, but is this amount adjusted for inflation also? I am thinking it is, but just wanted to make sure. --Preceding unsigned comment added by 167.219.88.140 (talk) 16:19, 28 September 2007 (UTC)

-- the amount is not adjusted for inflation and the amounts were set in 1982. It is likely based on the Dodd-Frank legislation passed recently that the SEC will propose new rules that will index these amounts for inflation but they have not done so yet

---The Current SEC proposal (as of January 2011) does not include any discussion of tying net worth to inflation. However it does include a new provision of excluding principle residence in determining a total net worth of one million USD. This is however only a proposal at the moment and may change.

Sources for Canada

In Canada, the status of accredited investor is clearly defined in National Instrument 45-106 (NI 45-106) in Part 1.1 (j) to 1.1 (l), issued september 9, 2005. That might be a good source to add to the site for the quote on Canada, since i have no clue on how to do it.

At the same time i would like to talk about the status of eligible investor, there's no page on it, here are some sources.

US:
"Minimum net worth requirements must be met by investors (in California) to be eligible to invest in Mortgage Funds operating subject to a Permit. These restrictions are intended to limit Mortgage Fund investment to more experienced investors. Additional restrictions limit the maximum percentage of an individual’s self-directed IRA that can be invested.

Eligibility: Net worth requirements (California) Either: • Annual gross income of $65,000 plus net worth of $250,000 (exclusive of home, furnishings and automobiles) or • Net worth of $500,000 (exclusive of home, furnishings and automobiles).

Mortgage funds operating pursuant to a Plan (described below) limit investor eligibility to California residents or to International residents. Residents of other states may not participate." http://en.wikipedia.org/wiki/Private_money_investing

Canada:
National Instrument 45-106 (NI 45-106) part 1.1 also but in Eligible Investor, sections(a)(i) to (a)(iii)

hope someone reads this and edits the page.

209.148.151.122 (talk) 05:30, 16 February 2008 (UTC)

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Situation in NZ has changed

Someone with expertise might want to comment more. It appears that under the FM conduct act (2013), the meaning of large is defined as Meaning of large (1)A person is large if at least 1 of the following paragraphs applies: (a)as at the last day of each of the 2 most recently completed financial years of the person before the relevant time, the net assets of the person and the entities controlled by the person exceeded $5 million: (b)in each of the 2 most recently completed financial years of the person before the relevant time, the total consolidated turnover of the person and the entities controlled by the person exceeded $5 million. (2)The frameworks and methodologies prescribed by the FMA under subpart 4 of Part 9 of this Act for the purposes of this clause (if any) must be complied with when determining whether either of the paragraphs of subclause (1) is satisfied.

The policy context is listed here within FAQ's. https://www.fma.govt.nz/compliance/offer-information/faqs/#schedule1offers

Fred114 22:15, 23 September 2019 (UTC) — Preceding unsigned comment added by Fred114 (talk • contribs)