U.S. securities regulators adopted new rules on Wednesday designed to protect less sophisticated people from investing in private placements and other securities offerings with less regulatory oversight.
The U.S. Securities and Exchange Commission's new rule, which was required by last year's Dodd-Frank Wall Street overhaul law, would exclude the value of a person's home from net worth calculations that are used to determine who is an "accredited investor." Only accredited investors who have a net worth of $1 million or more can participate in certain private placements and offerings that are not registered and do not require certain disclosures.
The rule comes on the heels of the 2007-2009 financial crisis, where home values plummeted and many investors lost money in sophisticated, mortgage-related securities instruments.
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