Yesterday, I wrote about Section 413 of the Dodd-Frank Wall Street Reform and Consumer Protection Act ("DF Act").  You can watch President Obama's explanation of Wall Street reform here. 

As a horse owner, I'm sensitive to expressions involving horses.  Thus, it occurs to me that in some ways the exclusion of an investor's primary residence for purposes of determining "accredited investor" status is akin to closing the barn door after the horse has fled.  After all, most homeowners have already experienced a substantial decline in, if not complete elimination of, the equity of their homes.  Moreover, many homeowners have tapped out any remaining equity through home equity lines of credit.  So, maybe  this change in the law won't make any significant difference to whether an investor qualifies as an "accredited investor".

What if Section 413 takes effect immediately (i.e., without any rule amendment on the part of the Securities and Exchange Commission)?  From a federal securities law perspective, maybe there is no real consequence.  If an offering otherwise qualifies as a Rule 506 offering, it is very likely that it will qualify as a transaction that is exempt under Section 4(2) of the Securities Act of 1933.  

At the state level, however, there could be some real consequences.  If the offering does not qualify as exempt under Rule 506, there is no federal preemption pursuant to Section 18(b)(4)(D) (see also Cal. Corp. Code Section 25102.1).