Two Critical Lessons Entrepreneurs and Business Executives Can Learn from Hulk Hogan

Posted in Closely Held Businesses and Business Start-Ups on June 28, 2010

Here are a few helpful hints for any entrepreneur, business executive, or professional in the sports and entertainment industry pulled from several pending lawsuits initiated by pro wrestling legend and actor Terry Bollea, better known to the world as Hulk Hogan:

1.  Always Maintain Adequate Insurance.  Hogan, who was reportedly worth as much as $30 million a few years ago before a less than amicable divorce and a horrific car accident involving his son that left a young man permanently disabled, apparently only had $250,000 worth of liability insurance coverage at the time of his son's accident, according to a lawsuit he filed against his insurance agent for negligence.  Regardless of your net worth or the type of business you are in, maintaining reasonable types and amounts of insurance coverage is a critical part of any risk management strategy. 

2.  Keep an Eye on Your Advisors.  Hogan is also suing a couple of his former attorneys for ringing up over $1 million in legal fees in connection with the fallout from his son's car accident, allegedly without telling him that his legal defense actually could have been provided per the terms of his existing insurance policies at no cost to him.  Professional athletes and entertainers are sometimes easy targets for being taken advantage of for a variety of reasons.  Regardless of the root cause of the problem, professionals cannot blindly delegate responsibility for their finances and business affairs to others, no matter how experienced, well-regarded, or well-meaning those advisors appear to be.  Trust, but verify, and never be hesitant to ask questions.  Once you start having suspicions about the people working for you, then it is generally time to make a change. 

Proposed Changes to Reg. D Definition of Accredited Investor

Posted in Real Estate Syndications on June 4, 2010

It seemed inevitable that the recent push for financial reform would reach Regulation D, the big question was how much of an impact would there be once the dust settled. At the moment, it appears Regulation D will remain intact in all material respects, with only modest revisions to the definition of "accredited investor" (interestingly, the SEC had proposed somewhat similar revisions a few years ago, but never promulgated them in final form).

Here's a summary of what the latest proposed amendment does, with respect to the Reg D accredited investor definition:

• mandates an immediate change to the Rule 501(a) accredited investor definition for individual investors, to exclude the value of one's principal residence from the net worth threshold of $1 million;
• contemplates (but does not require) that the SEC may review the definition as a whole (including, presumably, the annual income requirements to adjust for inflation); and
• requires that there be no adjustments to any accredited investor definition that raise the net worth threshold in excess $1 million, less the value of one's principal residence, for a period of four years.

Stay tuned to see what the final language in the bill looks like.