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.