SEC Issues Final Rule On Net Worth Standard For Accredited Investors

Title IV of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Act") set forth, among other regulatory changes, a revised net worth test for a natural person to qualify as an "accredited investor" for purposes of Regulation D under the Securities Act of 1933, as amended (the primary private placement exemption relied on by investment advisers managing private investment funds). The revised standard, which came into effect on July 21, 2010, requires such individual's net worth or joint net worth with the spouse of that person, at the time of investment to be $1,000,000, excluding the value of the primary residence of such natural person. On December 21, 2011, the Securities and Exchange Commission ("SEC") adopted a final rule which sets forth how to calculate an individual's net worth under the new standard, as well as provides for a limited grandfathering provision.