Terms + References

Securities Act of 1933: Regulation D

Also known as the “Truth in Securities” law, the Securities Act of 1933 was passed to protect investors by regulating the sale of securities following the 1929 stock market crash.

The Securities Act marked a landmark shift of governing power from state to federal hands, requiring that all securities transactions be registered with the Securities and Exchange Commission (SEC). Although there are a few exemptions to this mandated registration—of which include private offerings and government securities—the law ensured that information relating to the public sale of securities was readily available to investors.

What was outlined in Regulation D of the Securities Act?

One of the many regulations adopted in later years following the passing of the original Securities Act, Regulation D details a series of exemptions to the act in regards to private offerings.

More specifically, Rule 501 of Regulation D outlines the parameters of this exemption further from an individual investor’s perspective, distinguishing the normal investor from an accredited one. The criterion surrounding the qualifications of an accredited investor varies from country to country, but within the United States, they include individuals who satisfy any of the following qualifications:

  • Exceed an income of at least $200,000 within the last two years and expect to make the same amount in the current year
  • Exceed a combined income with a spouse of at least $300,000 within the last two years and expect to make the same amount in the current year
  • Possess a net worth of at least $1,000,000, excluding private residency