'Accredited investors' need more scratch under SEC plan

The value of an investor's primary home would not be taken into account when determining whether the individual is an accredited investor, according to a rule proposed by the Securities and Exchange Commission. By excluding the value of a primary residence, the SEC's determination of whether an individual is an “accredited investor” — they must meet a minimum-net-worth requirement of $1 million — now dovetails with the formula found in the Dodd-Frank Act. Accredited investors can participate in private and limited offerings that are exempt from registration requirements. The $1 million net-worth threshold would apply to an individual or a couple, the SEC said. The commission's proposal also clarifies the treatment of a mortgage on the primary residence in figuring out net worth, SEC Chairman Mary Schapiro said. Although the SEC is taking public comment on its proposal through March 11, the change really took effect back in June when Dodd-Frank was approved, the SEC said. Under another rule the SEC proposed yesterday, investment advisers to hedge funds and other private funds would have to provide regulators with information to help the Financial Stability Oversight Council evaluate the systemic risk that these funds pose. Information investment advisers provide on the new Form PF would be confidential, the commission said. The Commodity Futures Trading Commission proposed a similar measure today for private fund managers that register with that regulator.