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ARTICLE · 19 JANUARY 2012

SEC Finalizes Net Worth Standard For Accredited Investors

Dorsey & Whitney LLP
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The final rules are consistent with the intent of Dodd-Frank, but introduce new concepts which must be understood by both issuers and investors.

United StatesFinance and Banking
Christopher Doerksen
Christopher Doerksen

The Securities and Exchange Commission (the "SEC") has adopted new rules for calculating whether an individual is eligible to participate in certain unregistered securities offerings as an "accredited investor", as defined in Regulation D under the Securities Act of 1933, as amended (the "Securities Act"), by virtue of having a net worth exceeding $1,000,000. These rules are intended to comply with Section 413(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank"), enacted on July 21, 2010, which directed the SEC to amend its definition of accredited investor to exclude the value of an individual's principal residence from the calculation of such individual's net worth. Before Dodd-Frank, the value of an individual's principal residence was included in calculating the individual's net worth.

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