Point of Law is a great resource for digestible breakdowns of regulation and bureaucratic legal-speak. Today Jonathan B. Wilson published a great breakdown of Wisconsin’s proposed crowdfunding exemption this morning. One paragraph is of particular importance…
In a strange twist, however, the Wisconsin bill would adopt a unique definition of “accredited investor” (which is generally defined under Rule 501 of the SEC’s Regulation D as either (i) an individual with $200,000 or more in adjusted gross income ($300,000 if married filing jointly) for each of the past two years (and the reasonable expectation of achieving the same outcome in the current year), or (ii) an individual with a net worth of $1 million or more (excluding the individual’s principal residence). Under the Wisconsin bill, however, the income prong of the definition would be reduced to $100,000 (for single investors) and $150,000 (for married investors) while the net worth prong would be reduced to $750,000. The proponents of the bill have said that this twist is for the purpose of sweeping more Wisconsin residents into the accredited investors definition.
Lowering the threshold for accredited investor status to $100,000/$150,000 would have a profound affect on access to early-stage funding rounds for Wisconsin investors.
It bears mentioning that this is only a proposed bill, so this rule could be stripped out or changed before it goes to a vote.
The same type of change could potentially take place at the federal level, as it has been widely reported that the SEC is ready to rethink the definition of accredited investor. The SEC recently solicited public comment on just such a change.[h/t Point Of Law]