By Final Rule that becomes effective on February 27, 2012, the SEC has amended its rules to exclude the value of a person’s home from net worth calculations used to determine whether an individual may invest in certain unregistered securities offerings. Dodd-Frank Act Section 413(a) requires the definitions of “accredited investor” in the 1933 Securities Act rules to exclude the value of a person’s primary residence for purposes of determining whether the person qualifies as an “accredited investor” on the basis of having a net worth in excess of $1 million.
SEC rules permit certain private and limited offerings to be made without registration, and without requiring specified disclosures, if sales are made only to “accredited investors.” Under the amended net worth calculation, indebtedness secured by the person’s primary residence, up to the estimated fair market value of the primary residence, is not treated as a liability, unless the borrowing occurs in the 60 days preceding the purchase of securities in the exempt offering and is not in connection with the acquisition of the primary residence. In such cases, the debt secured by the primary residence must be treated as a liability in the net worth calculation.
Dodd-Frank Section 413(b) requires the SEC to review the definition of accredited investor every four years and authorizes the SEC to make adjustments based on its reviews. The SEC also adopted technical amendments to Form D and a number of other rules to conform them to the requirements of Section 413(a) and to correct cross-references to former 1933 Act Section 4(6) which was renumbered Section 4(5) by the Dodd-Frank Act.
No comments:
Post a Comment