Whether your investors are accredited is important if you plan to rely on Regulation D as your exemption to federal securities registration for your private placement offering. Pending financial reform legislation may decrease the number of potential investors who qualify as accredited.
Currently, an individual qualifies as an accredited investor if the individual earns over $200K annually ($300K with spouse) OR has a net worth of $1M. The Financial Reform Bill proposes modifications to narrow the accredited investor exemption. For example, an amendment added to the Senate version of the bill narrowed the definition for accredited investor by excluding the investor’s primary residence from the $1M net worth calculation.
The House and Senate versions must be reconciled before a final law is passed so it’s unknown what the final impact on the accredited investor definition will be. The full name of the Financial Reform Bill is Wall Street Reform and Consumer Protection Act of 2009 . H.R. 4173. You can find additional information (including the full text) about it by searching by the name at thomas.loc.gov
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