New Accredited Investor Net Worth Test to Impact Private Investment

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In the Dodd-Frank Act passed in 2010, Congress required that an individual’s primary residence be excluded from the $1 million net worth test for accredited investor status. On January 25, 2011, the SEC issued proposed rules to implement the exclusion. The new net worth test will undoubtedly reduce the pool of prospective accredited investors, have a negative impact on companies’ prospects for raising capital and require companies to review and make changes to their offering documents to conform to the new rules.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Alon Kapen | Attorney Advertising

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