SEC Acknowledges Exclusion of the Value of a Principal Residence in Determining “Accredited Investor” Status

January 09, 2012
The Securities and Exchange Commission recently released a final rule conforming the definition of “accredited investor” for purposes of certain private placements of securities to the requirement in The Dodd-Frank Wall Street Reform and Consumer Protection Act that the value of an individual’s primary residence be excluded from the calculation of his or her net worth. The final rule also clarifies certain ambiguities regarding the calculation of net worth and will take effect on February 27, 2012. This update reviews the SEC’s amended definition and the steps companies should take to ensure they are in compliance.