Alerts

REMINDER: New Accredited Investor Standard

July 29, 2010

Upon the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Act") on July 21, 2010, the accredited investor standard (as set forth in Rule 501 of Regulation D, the private placement safe harbor promulgated under Section 4(2) of the U.S. Securities Act of 1933, as amended) was modified so that a natural person is no longer permitted to include the value of his or her primary residence in determining whether such person meets the $1 million net worth test. The U.S. Securities and Exchange Commission (the “SEC”) issued guidance on July 23, 2010, providing that in calculating net worth, the investor may exclude the amount of any indebtedness secured by the primary residence, up to the fair market value of the primary residence (indebtedness in excess of the fair market value should be considered a liability and deducted from the investor’s net worth). The new net worth standard only applies to subscriptions occurring after the enactment of the Act.