To begin the process of verifying your accredited investor status, please use the link below. For questions regarding this process, please see the FAQ section below. For additional information, please contact your Vistia Capital representative directly or reach out to [email protected].
Some investments offered by Vistia Capital are 506(c) securities, which are regulated under SEC Rule 506(c) of Regulation D. Per rule 506(c), purchasers of these securities must be accredited investors as defined by the SEC.
- An accredited investor, in the context of a natural person, includes anyone who:
- earned income that exceeded $200,000 (or $300,000 together with a spouse or spousal equivalent) in each of the prior two years, and reasonably expects the same for the current year, OR
- has a net worth over $1 million, either alone or together with a spouse or spousal equivalent (excluding the value of the person’s primary residence), OR
- holds in good standing a Series 7, 65 or 82 license.
There are other categories of accredited investors, including the following, which may be relevant to you:
- any trust, with total assets in excess of $5 million, not formed specifically to purchase the subject securities, whose purchase is directed by a sophisticated person, OR
- certain entity with total investments in excess of $5 million, not formed to specifically purchase the subject securities, OR
- any entity in which all of the equity owners are accredited investors.
*for more information on accredited investors, as defined by the SEC please visit this link.
- For determinations of income, you can use any official tax records (tax returns, W-2s, K-1s, 1099s or any other governmental document that states your income for tax purposes).
- For determinations of net worth, the investor must show evidence of assets held less liabilities. Assets can be proven via bank statements, appraisal of real estate (so long as not the investor’s primary residence), brokerage statements and the like. Liabilities are usually determined using a consumer credit report. All documentation must be valid and true within the preceding 90 days.
- For accreditation via an SEC-approved license, you can simply provide your CRD number.
- The term “securities” is broadly defined under United States federal law. It includes things like promissory notes, stocks, bonds, membership interests, options and other investment contracts. A workable, short-form test would be: if you are investing your money in equity of a company or in order to make a debt claim on its cash flows, you are likely investing in a security.
- The United States Securities and Exchange Commission (the “SEC”) is the primary federal agency responsible for regulating securities markets. The SEC’s stated goals are to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation. All securities sold in the United States must either be registered with the SEC or otherwise exempt from registration. The registration process can be difficult, expensive and time consuming, so issuers will often look for exemptions from registration. The most common exemption from registration is for sales of securities to what are known as “accredited investors.”
- Public securities are typically traded on one of the national exchanges (for example, the NYSE or Nasdaq). Issuers of public securities must go through a registration process with the SEC prior to listing stock on a national exchange, and they maintain a standardized set of ongoing reporting obligations.
- Private securities, on the other hand, do not trade on any of the national exchanges and have no federally mandated reporting requirements. Due to the lack of exchanges and ongoing information updates, privately held securities have traditionally been significantly less liquid than their publicly traded counterparts. The JOBS Act broadened the manner in which issuers could raise capital and provided for additional paths to liquidity for private securities.
- The two key components of securities regulation in the United States are anti-fraud liability and disclosure requirements.
- Anti-fraud. Regardless of whether a security is public or private, investors and regulators have the ability to bring suit in the event an issuer or its representatives (1) employ any device, scheme or artifice to defraud, (2) make any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstance under which the statements were made, not misleading or (3) engage in any act, practice or course of business which operates or would operate as a fraud or deceit upon any person.
- Disclosure. The other tool the SEC uses to achieve its state objectives is a broad spectrum of disclosure depending on the sorts of investors an issuer or its representatives wishes to market to. As a general rule, the more broadly targeted the investor group is and the less capable the investors sought are to fend for themselves, the more disclosure the issuer is required to provide (often by registering the securities to be offered). Ultimately, if an issuer sells to enough unaccredited investors or becomes large enough with over 2,000 total investors, it will be forced to report as a public company does.