sec rules: rohrabacher was not qualified to invest

SEC: You can only qualify for investments like ISI if you have the money to lose

According to the SEC, an individual could become an accredited investor if the individual has “earned income that exceeded $200,000 (or $300,000 together with a spouse) in each of the prior two years, and reasonably expects the same for the current year, OR has a net worth over $1 million, either alone or together with a spouse (excluding the value of the person’s primary residence). 

In 2012, when Rohrabacher made his investment - he didn't have enough income to qualify for it

In 2012, the salary of a U.S. House member was $174,000 -- a pretty good living but not enough to qualify as an investor by SEC rules. 

Congressman Rohrabacher’s financial disclosure indicates that in 2012 his wife didn't earn any income. 

They did have rental income coming in from a townhouse in DC but Rohrabacher reported that it was in the range of $5,001 - $15,000. 

At most, Rohrabacher’s personal income in 2012 was $189,000.

Therefore, he would not have met the SEC's requirement of $200,000 in annual income.

In 2012, when Rohrabacher made his investment - he didn't have the net worth to qualify for it

Again, we look to Rohrabacher's financial disclosures to find out what his net worth was. In 2012, excluding the ISI Life Sciences, Inc. investment, Rohrabacher’s largest asset was a D.C. townhouse valued at $501,000 - $1,000,000. But the townhouse also had  a mortgage valued at $501,000 - $1,000,000. 

If we're generous and assume that the townhouse was at the high end of the range ($1,000,000) and the mortgage was at the low end of the range ($500,000) -- this would be a net positive of $500,000 towards Rohrabacher's net worth.

But when we look for other assets to add to Rohrabacher's net worth, there aren't nearly enough of them to get us close to $1,000,000. In fact, there are a number of debts that bring the Rohrabacher's net worth down.

If Dana Rohrabacher was telling the truth on the financial disclosures he submitted to Congress (a big IF), then his net worth did not qualify him to make this investment in ISI.