How do you register as an accredited investor?
There's no central database to register as an accredited investor. It would certainly be more convenient if you could, for example, register with the SEC as an accredited investor once and be done with the process.
Unfortunately, this isn't the case. You'll likely have to register as an accredited investor every time you want to participate in a restricted investment opportunity. You may only have to register once with each firm, but it's far from a universal registration at this time.
When you register as an accredited investor, you can expect to fill out some sort of questionnaire to determine if you qualify, and you'll also have to submit documentation that verifies your answers. So if you qualify as an accredited investor based on your income, you may have to submit your two most recent tax returns.
Why does it matter if you're accredited?
Why does the SEC care if you're accredited? Why can't just anyone participate in a hedge fund or private-equity investment opportunity?
There are a few reasons. First, accredited investors, or qualified investors, tend to be more financially sophisticated than the average person. Someone who has passed the Series 65, for example, knows how to analyze investment opportunities. Second, most accredited investors have significant financial resources and can afford to take losses on investment opportunities that don't work out.
Of course, this isn't a perfect system. It's certainly possible for someone to meet the definition of an accredited investor who really isn't a sophisticated investor able to analyze complex investment opportunities. Plenty of millionaires have no clue how to read financial statements. And plenty of people with financial credentials don't have enough money to absorb losses.
The bottom line
The accredited-investor rule and the verification process are there to protect you, not the firms offering investment opportunities. The idea is to make sure you have enough financial sophistication to know what you're getting into, as well as enough financial cushion to absorb losses if an investment doesn't go well.