SEC Staff Issues Compliance Guide for New Accredited Investor Net Worth Standard, Withdraws Outdated C&DI Questions

The SEC staff issues a small entity compliance guide explaining the new net worth standard for accredited investors and withdraws two outdated questions from its Compliance and Disclosure Interpretations (C&DI).

PLC Corporate & Securities

On December 21, 2011, the SEC adopted a final rule conforming the net worth standard in the definition of "accredited investor" under the Securities Act to the requirements of the Dodd-Frank Act (see Legal Update, SEC Adopts Net Worth Standard for Accredited Investors under Dodd-Frank Act (www.practicallaw.com/9-517-0356)). The changes took effect on February 27, 2012.

On February 27, the SEC staff issued a brief Small Entity Compliance Guide that provides a plain English summary of the new standard, including sample net worth calculations.

On the same day, the SEC staff withdrew two related, outdated questions from its Compliance and Disclosure Interpretations: Securities Act Rules:

  • Question 179.01 on accredited investors.

  • Question 255.47 on the definitions and terms used in Regulation D.

The questions were withdrawn to reflect the February 27 effectiveness of the new net worth standard.

For a description of the definition of accredited investor, including a discussion of the amended net worth standard, see Practice Note, Section 4(2) and Regulation D Private Placements: Accredited Investors (www.practicallaw.com/8-382-6259).

 
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