Yeah, it's the rule, and it's relevant but not in the obvious way (like: you wake up at night and the SEC has kicked down your door and shot your dog b/c you're not an accredited investor but have investments that they think you need to be in order to make).

The origins of the rule were partially in reaction to various scams that were not uncommon pre-great-depression: people would go around selling shares ("music-man" style) in companies that didn't exist, or were otherwise fraudulent, etc., to unsuspecting dupes (of which there were plenty, as is always the case).

Thus the effect of the rule is mostly on the issuer of securities: the point was mostly to deter scammers, but not really to punish their victims. Currently, there are many categories of investment that either are 100% closed off to non-accredited investors or that "theoretically" are not closed off but are "practically" closed off (eg b/c the additional regulatory overhead and legal uncertainty and "bad juju" induced by having non-accredited investors as shareholders means no one sensible would willingly allow non-accredited investors to invest).

Hence your experience: it's not "illegal" for you to be a non-accredited investor in a private company, but unless all the i's are dotted and t's crossed the private company might be in a bad way wrt regulation on account of having you as an investor (inadequate documentation of your informed consent, or failure to keep enough bookkeeping, etc.). Moreover, even if they were doing everything 100% correct wrt you the presence of your investment might scare off other parties (eg during due diligence for a round of funding).

As a regulatory rule it's accomplished it's ostensible purpose -- the # of outright-fraudulent investment schemes is nothing like it was in the 20s, and the direct impact of the remaining schemes is mainly felt by those that mostly can afford the loss and ought to have known better (eg: Madoff's or Stanford's clients).

One thing I'd like to see is some kind of relaxation in the accredited-investor regulations that'd make it easier for the smaller investor to make direct investments in private companies. This needn't be difficult to implement, as all it might take is eg a standardized waiver process that records: the terms of the investment, the investor's consent to the agreement, and lots of identifying information on the issuer (firm and specific individual making the offering); if necessary, restrict the sophistication of the allowed instruments (eg: direct equity purchase, simple options, and so on are ok; anything more complicated not ok for the "standard waiver").

Sadly I've not seen much mention of "proposals" like the above, but something like that would (I think) really open a lot of productive opportunities for a lot of people.

Edit: this section is interesting reading:

http://www.sec.gov/info/smallbus/qasbsec.htm#eod6

It's an informal discussion of various ways to sell securities in a private company. The interesting parts are:

(1) the motivations behind the exemptions (eg: the intrastate rule; given the point was (originally) to keep traveling hucksters from defrauding suckers, the impetus for an exemption for a "local" business makes sense)

(2) even in this informal summary note just how easy it is to fall out of grace wrt these "exemptions" (ie: if someone is supposed to buy "not for resale" then resells, you personally might have a breach of contract with that person but you might also now start worrying about being in breach of regulations)