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Accredited Investor Checklist

An Accredited Investor Checklist is used to approve or accredit a potential investor according to the SEC’s Rule 501 Regulation D.
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Frequently Asked Questions

Another term for unregistered shares is restricted shares, a type of securities not registered with the SEC or available for trade on the exchanges. They don't have a registration statement on file with the SEC. The most prominent feature of unregistered shares is that they have fewer investor protections and are generally considered high-risk. That is why these shares are only offered to accredited investors.

A registered share is a type of share issued in the name of a shareholder. The information of the shareholder is kept on the company’s record. And if the shareholder chooses to transfer the registered share to another shareholder, they will need to re-register it.

Rule 144 of the SEC exists to set conditions on how unregistered shares can be sold and resold. The rule specifies conditions that have to do with public information pertaining to the investor and how the seller can propose the sale.

It refers to the statement on the stock certificate. This is a statement of all the restrictions pertaining to the transfer of shares. The SEC puts the legend on the stock certificate of unregistered shares. However, some states may not require the legend statement.

Purchasing unregistered shared can be tricky and investors can find themselves in a security scam. Tasked to protect investors, the SEC has specific recommendations for investors of these shares. Anything that promises high returns without an equivalent increase in risk, for example, is usually a red flag. Aggressive sales tactics are not a good sign either. And if you run into problems with the sales documentation, that’s usually the sign of a scam.