A new definition will become effective February 27, 2012, which changes the requirements for an individual investor to be eligible under U.S. law as an “accredited investor” for the purpose of registration statement exemptions under Regulation D. The changes affect what can be counted in the individual investor’s net worth. The final SEC rule can be accessed here.

As amended, the new individual net worth standard in the accredited investor definition is:

“Any natural person whose individual net worth, or joint net worth with that person’s spouse, exceeds $1,000,000.

1. Except as provided in paragraph (2) of this section, for purposes of calculating net worth under this paragraph:
   1. The person’s primary residence shall not be included as an asset;
   2. Indebtedness that is secured by the person’s primary residence, up to the estimated fair market value of the primary residence at the time of the sale of securities, shall not be included as a liability (except that if the amount of such indebtedness outstanding at the time of the sale of securities exceeds the amount outstanding 60 days before such time, other than as a result of the acquisition of the primary residence, the amount of such excess shall be included as a liability); and
   3. Indebtedness that is secured by the person’s primary residence in excess of the estimated fair market value of the primary residence at the time of the sale of securities shall be included as a liability.”