SEC Regulation D 'Accredited Investor' Definition Changes

On July 21, 2010, President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Act").

Among the numerous provisions of the Act, one provision (Section 413) concerns the "accredited investor" definition in SEC Regulation D (relating to limited and private offerings under the Securities Act of 1933) as it relates to natural persons. Section 413 of the Act would require exclusion of the value of a natural person's primary residence from the net worth standard for "accredited investor" status of a natural person.

This provision will take effect immediately.

Therefore, with respect to any Regulation D offering currently in process in which the net worth of natural persons is relied upon for "accredited investor" status, subscription materials will likely need to be revised to reflect that prospective investors relying upon the net worth standard for individuals for "accredited investor" status must satisfy that standard exclusive of the value of the individual's primary residence.

For additional information on this topic, please contact Ravi Sundara at RSundara@StolarLaw.com or (314) 641-5143.

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