Series 79 practice questioneasyRegulation D
Under current SEC rules, what is the income threshold for an individual to qualify as an accredited investor?
- AAnnual income exceeding $100,000 in each of the two most recent years
- BAnnual income exceeding $200,000 in the most recent year only
- CAnnual income exceeding $500,000 in the most recent year
- DAnnual income exceeding $200,000 (or $300,000 jointly with a spouse) in each of the two most recent years, with a reasonable expectation of the same in the current year✓ Correct answer
Explanation
Why D — Annual income exceeding $200,000 (or $300,000 jointly with a spouse) in each of the two most recent years, with a reasonable expectation of the same in the current year
Under Rule 501(a) of Regulation D, an individual qualifies as an accredited investor based on income if they had income exceeding $200,000 in each of the two most recent years (or $300,000 jointly with a spouse or spousal equivalent) and have a reasonable expectation of reaching the same level in the current year. Alternatively, an individual can qualify based on a net worth exceeding $1 million, excluding the value of their primary residence. The SEC expanded the definition in 2020 to also include holders of certain professional certifications and knowledgeable employees of private funds.
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