The regulator on Wednesday said the value of a person’s primary residence must be excluded from net worth calculations used to determine qualifications to invest in unregistered securities offerings. These offerings range from hedge funds to derivatives and private debt, which often are viewed as less transparent and risky than publicly registered offerings.
Financial planners who work with households with
“I have no problems with the
Under the new rules that determine a client’s “accredited investor” status, any debt secured by the investor’s primary residence within 60 days of buying the unregistered securities must be treated as a liability. In the past, clients could artificially inflate the net worth on paper by borrowing against the value of their homes shortly before participating in an exempt securities offering.
“I think it was the right thing to do,”
One financial advisor in
The amendment limits potential access to capital for investment, according to an email statement from
“Investors that have a net worth in excess of
Donna Mitchell writes for Financial Planning.
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