Dodd-Frank Redux: SEC Seeks to Clarify "Accredited Investor" Net Worth Calculation
On July 21, 2010, President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank Act"). Among other things, the new law provided that, effective immediately, the value of an individual investor’s primary residence must be excluded in determining whether an investor meets the $1 million threshold net worth necessary to qualify as "accredited" when seeking to participate in a private placement of securities.
Section 413(a) of the Dodd-Frank Act also requires that the Securities and Exchange Commission ("SEC") amend its rules under the Securities Act to reflect this revised net worth standard. On January 25, 2011, the SEC issued its proposal for amending the relevant rules, including language intended to clarify how to calculate the amount of "value" of the primary residence which must be excluded.
Partner Stephen M. Goodman, a member of Pryor Cashman’s Corporate Group, has authored an informative Legal Update describing the proposed new rules and offering recommendations for how issuers and investors should respond.
To read the update, entitled "Dodd-Frank Redux: SEC Seeks To Clarify "Accredited Investor" Net Worth Calculation," please click here.
