Accreditation & Suitability

Alternative investments are now easier to find for individual investors, but crowdfunding websites often fail to incorporate two cornerstones of private investing: Accreditation and Suitability.  Crowdfunding portals typically rely on the investors’ ability to self-select deals that may or may not be appropriate for them.

Carofin strives to ensure in its private placement offerings that each investor is not only accredited, as required in S.E.C. Regulation D offerings, but also has considered whether the investment is suitable to risk tolerance and investment goals.  Accreditation involves compliance with specific financial tests imposed S.E.C. (i.e., minimum net worth or annual income tests necessary to participate in these riskier offerings).  Suitability, on the other hand, is a more subjective test requiring Carofin to first determine that a recommended security fits its customer’s investment profile, preferences and goals.

Carofin, like all FINRA broker-dealers, is required to determine investor suitability under FINRA Rule 2111.





In the interest of accessibility, here are some terms that any investor should be familiary with.