SEC Staff Issues Compliance Guide for New Accredited Investor Net Worth Standard, Withdraws Outdated C&DI Questions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issues a small entity compliance guide explaining the new net worth standard for accredited investors and withdraws two outdated questions from its Compliance and Disclosure Interpretations (C&DI).
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On the same day, the SEC staff withdrew two related, outdated questions from its Compliance and Disclosure Interpretations: Securities Act Rules: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The questions were withdrawn to reflect the February 27 effectiveness of the new net worth standard.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).