Last month, the Securities and Exchange Commission (SEC) adopted final amendments to its rules defining an “accredited investor” under the Securities Act of 1933 (Securities Act), with respect to private offerings exempt from the registration provisions of the Securities Act. Certain securities offerings solely to accredited investors are exempt from Securities Act registration pursuant to Section 4(5) of the Act. Further, accredited investors are exempt from the 35-person limit for private offerings conducted pursuant to Rules 505 and 506 of Regulation D under the Securities Act and do not have to be provided the higher level of disclosure regarding the offering and the issuer that is required if non-accredited investors participate in the offering. Individuals can be considered accredited investors if they meet certain income requirements or have a $1 million net worth.

The SEC’s amended rules revise the definition of “accredited investor” in accordance with Section 413(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd Frank), which required the SEC to adjust the net worth standard to exclude the value of the investor’s primary residence...