Who counts as an accredited investor
Under the SEC's Rule 501(a), individuals generally qualify with income over $200,000 (or $300,000 jointly with a spouse or spousal equivalent) in each of the past two years and the same expected this year; net worth over $1 million excluding a primary residence; or certain professional licenses in good standing (Series 7, 65, or 82). See the SEC's accredited investor bulletin.
Common accredited investor scams
- "Exclusive allocation" pitches for famous pre-IPO companies, with a deadline.
- Flattery as due diligence: "You're sophisticated, you don't need the PPM."
- Fake verification: a quick checkbox in place of real 506(c) verification, which can mean the issuer isn't following the rules elsewhere either.
- Affinity pitches through professional networks, alumni groups, or religious communities.
- Self-directed IRA routing: encouraging you to move retirement money into a private deal through a custodian that doesn't vet investments.
Can accredited investors recover fraud losses?
Yes. Accredited status means you may legally buy certain private investments; it does not waive your protection against fraud. Federal and state antifraud laws protect every investor. Sellers sometimes argue a sophisticated investor should have known better, so documenting exactly what you were told matters.