The SEC has issued a proposed rule conforming the definition of "accredited investor" under the Securities Act of 1933, as amended, to the requirements of Section 413(a) of the Dodd-Frank Act. Under the proposed rule, in determining whether an individual investor has satisfied the $1 million net worth threshold for accredited investor status, the value of the individual investor's primary residence would be excluded. The proposed rule further provides that the value of an individual investor's primary residence would be determined by estimating the property's fair market value and subtracting the amount of debt secured by the property (up to the fair market value of the property). Indebtedness secured by an individual investor's primary residence in excess of the property's fair market value would be considered a liability and would be deducted from the individual investor's net worth.

SEC Rel. No. 33-9177 (Jan. 25, 2011)