Law Firm Requests SEC Redefine “Accredited Investor” To Include Same-Sex Couples

The Supreme Court’s decision to overturn DOMA and recognize same-sex marriages at the federal level has drastically changed tax and employee benefits laws. It may also change SEC rules in the near future.

 Under current SEC rules, certain offerings of stock by small companies can only be made to accredited investors. Entrepreneurs rely heavily on these offerings to raise venture capital. One of the ways that an individual can become an accredited investor is by having a minimum net worth or salary, either alone or with her spouse. The minimum wealth requirements are generally easier to meet with a spouse than they are for an individual to meet on her own.

 As a result, one law firm has called for the SEC to amend their regulations to permit same-sex couples to use the spousal requirements for accredited investor status. If the SEC agrees to the change, it will enable many same-sex couples interested in angel investing to pursue more opportunities.

© 2013 Parsonage Vandenack Williams LLC

For more information, contact info@pvwlaw.com

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New SEC Rules Allow General Solicitations

On September 23, 2013, the JOBS Act goes into effect allowing businesses to advertise investment opportunities that can exceed $1 million to the public without having to go through the expense of securities registration. In order to make general solicitations, the businesses will have to limit investment to only accredited investors (typically high-income/high-net-worth individuals) and the business will be required to document verification of accredited investor status. These provisions modify Rule 506 of Regulation D, an often used exemption for private investment.

The ability to generally advertise and solicit investment provides valuable flexibility and reduced cost for those seeking to raise capital; however, be aware that this type of solicitation still requires substantial disclosures and compliance with all other Regulation D requirements under Rule 506.

© 2013 Parsonage Vandenack Williams LLC

For more information, contact info@pvwlaw.com