Most private funds are sold under SEC Regulation D, which limits many offerings to accredited investors. The rules assume these investors can evaluate risk and absorb losses without the protections of a registered offering.
The main tests for individuals
- Income: over $200,000 in each of the last two years ($300,000 together with a spouse or spousal equivalent), with a reasonable expectation of the same this year.
- Net worth: over $1,000,000, alone or jointly, excluding your primary residence.
- Professional credentials: holding a Series 7, 65 or 82 license in good standing.
- Certain “knowledgeable employees” of the fund itself.
Entities
Trusts, LLCs and companies can qualify with more than $5,000,000 in assets (not formed just to invest), or if every owner is accredited.
506(b) vs. 506(c)
Under Rule 506(c) a fund may advertise, but must take reasonable steps to verify each investor’s status (documents, a professional’s letter, or the minimum-investment approach from the SEC staff’s March 2025 no-action letter). Under 506(b) there is no general advertising, and self-certification is more common.
Meeting the legal threshold is only the first question. The rest of Phase 1 asks whether a private investment fits your finances.
Related
Your journey
More on this stage: Deep Dive: How 506(c) Accreditation Verification Works · Deep Dive: Calculating Net Worth Without Your Home · Deep Dive: Talking It Through as a Household
Start the next stage: Phase 2: Now you think you are an investor