The Dodd-Frank Wall Street Reform and Consumer Protection Act, signed into law last week, will impact not only financial institutions and public companies generally, but also companies seeking to privately sell securities under the exemptions from registration found in Regulation D, adopted under the Securities Act of 1933.

In particular, the Act modifies the definition of “accredited investor” in a manner that may make it more difficult for individuals to qualify as accredited investors and requires the SEC to adopt rules restricting certain “bad actors” from selling securities under Regulation D.

The changes to the “accredited investor” definition are effective immediately, so public and private companies raising - or planning to raise - capital in Regulation D offerings should immediately (i) revise their subscription and disclosure documents and (ii) take appropriate additional steps to ensure that any individual investors purchasing securities based on an exemption that relies on accredited investor status meet the revised standards, since failure to comply with the new requirement could result in the loss of the company’s registration exemption.