Corporate Governance

How the Wall Street Reform Act Impacts Smaller Businesses: Conclusion

By J Robert Brown Jr.

Clearly there are a significant amount of additional legislative and statutory changes in the Act that may be of interest to a large number of lawyers, accountants, bankers, mortgage bankers, broker-dealers, real estate professionals, and business men and women. The foregoing only deals with a small slice of the Act.

It is important to note that many of the provisions are subject to future rule making, although some, such as the definition of 'accredited investor' and many of the SEC enforcement provisions are also effective immediately upon enactment and effective immediately notwithstanding the fact that rule making is also required.99  The most significant provisions of the Act require studies by the SEC or the Comptroller General and the General Accounting Office (the 'GAO'). In the few provisions discussed in this article, there are at least twenty provisions that require studies within the next two years or less.

Some of these studies are narrowly defined, and others will be far-reaching. In any event, there will be a significant amount of SEC and GAO staff time devoted to these studies and the anticipated rulemaking activities. As a result, the enactment of the Act should be viewed not as the end, but rather as the beginning of a significant amount of regulatory and administrative activity which will come to fruition over the next two to three years.99 Section 413 of the Act provides as follows:

• 'The Commission shall adjust any net worth standard for an accredited investor, as set forth in the rules of the Commission under the Securities Act of 1933, so that the individual net worth of any natural person, or joint net worth with the spouse of that person, at the time of purchase, is more than $1,000,000 (as such amount is adjusted periodically by rule of the Commission), excluding the value of the primary residence of such natural person, except that during the 4-year period that begins on the date of enactment of this Act, any net worth standard shall be $1,000,000, excluding the value of the primary residence of such natural person.'

Note that in mandating this definition, the Congress did not address § 2(a)(15) of the 1933 Act which contains a definition of the term 'accredited investor.'??

Herrick K. Lidstone, Jr., Burns Figa & Will, PC

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Full post as published by The Race to the Bottom on August 03, 2010 (boomark / email).