SEC Changes Accredited Investor Standards

The SEC recently adopted rules to conform the definition of "accredited investor" to the change implemented by the Dodd-Frank Wall Street Reform and Consumer Protection Act. The Dodd-Frank Act revised the definition of "accredited investor" under federal securities laws as it relates to natural persons to exclude primary residences from the calculation of net worth. This change was effective upon enactment of the Dodd-Frank Act.

Under SEC rules, individuals and entities that fall within the definition of "accredited investor" may participate in certain private offerings that are exempt from the registration requirements of the Securities Act of 1933. One way for an individual to qualify as an accredited investor is to have a net worth of at least $1 million, either alone or together with his or her spouse.