SEC Adopts Final Rule on “Accredited Investor” Standard

The Securities & Exchange Commission adopted earlier this month its proposed final rule regarding the standards that are used to determine who is an “accredited investor” and thus able to participate in certain unregistered private placements and offerings. For your reference, here’s a brief roundup of legal updates on the new rule:

SEC Adopts Final Rule Modifying Net Worth Definition for “Accredited Investors” (Akerman Senterfitt)

“On December 21, 2011, the U.S. Securities and Exchange Commission (‘SEC’) adopted a final rule modifying the net worth standard for ‘accredited investors.’ … The final Rule is similar to the proposed rule promulgated in January 2011, but with two important changes relating to the inclusion in the calculation of a person’s net worth of incremental debt, secured by such person’s primary residence, incurred during the 60 day period prior to a sale of securities and a limited grandfathering provision for certain ‘follow-on’ offerings.” Read more»

SEC Amends Accredited Investor Net Worth Standards per Dodd-Frank (Duane Morris LLP)

“The Amendments provide that a person’s primary residence may not be included as an asset in calculating that person’s net worth. Likewise, debt secured by an investor’s primary residence is not included as a liability in the net worth calculation. Nevertheless, indebtedness secured by a primary residence that exceeds the estimated fair market value of the primary residence (that is, when the primary residence is underwater) will be included as a liability in the net worth calculation.” Read more»

Dodd-Frank Update: Final Rule on Accredited Investor Standard (Meyers & Heim LLP)

“Further rulemaking on this issue is expected – Section 415 of the Dodd-Frank Act requires the Comptroller General of the United States to conduct a ‘Study and Report on Accredited Investors’ examining ‘the appropriate criteria for determining the financial thresholds or other criteria needed to qualify for accredited investor status and eligibility to invest in private funds.’ The SEC will use this information in future rulemaking on this issue.” Read more»

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