Net Worth Standard for Accredited Investors
On December 29, 2011, pursuant to a requirement in the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Securities and Exchange Commission (SEC) issued a final rule to revise the “accredited investor” standard under the Securities Act of 1933. The revised “accredited investor” standard excludes the equity value of the investor’s primary residence from the $1 million net worth threshold for individuals. The definition of “accredited investor” is an integral part of the SEC rules that permit certain private and limited offerings to be made without registration and without requiring specified disclosures when sales are made only to accredited investors. This final rule is effective on February 27, 2012.
SOURCE: Office of Advocacy, Small Business Administration