A qualified investor, sometimes referred to as an "accredited investor," is someone deemed to have sufficient financial sophistication to be excluded from certain U.S. regulations that are designed to protect most investors. For example, companies that wish to raise capital from individuals without issuing registered securities must limit their search to accredited investors. The general public is thus excluded from investing opportunities such as privately held companies and hedge funds, which can be particularly risky.
Stemming from the Securities Act of 1933 and defined in Regulation D, accredited/qualified investors are classified as meeting certain criteria, such as having an annual income of at least $200,000 in each of the past two years ($300,000 for joint income) or a net worth of at least $1 million. There are other criteria and restrictions, too; for example, the net worth may be held jointly with a spouse and may not include a home's value in the calculation.
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