SIE Exam Question 366: Answer and Explanation

Question: 366

Henry and Jennifer, a married couple, have a net worth of $800,000, excluding home equity. Their income has been about $250,000 for several years. Are they eligible to participate in a private placement of securities as accredited investors?

• A. No, because they meet neither test
• B. Yes, because they meet both tests
• C. Yes, because they meet the net worth test
• D. Yes, because they meet the income test

Correct Answer: A

Explanation:

A - Under Regulation D, for a married couple to be accredited they must have a net worth, excluding home equity, of $1 million. The income test for married persons is a joint income of $300,000 in each of the two most recent years. This couple meets neither test.