Subject: File No. S7-04-11
From: David A Marion
Affiliation: Attorney at Law

February 4, 2011

The addition to the revised accredited investor net worth standard of the words "calculated by subtracting from the estimated fair market value of the property the amount of debt secured by the property, up to the estimated fair market value of the property," is inconsistent with the Dodd-Frank requirement that "the value of the primary residence" should be excluded in determining net worth.

The effect of the added language, applied literally, is that the more highly leveraged the primary residence, the more of its fair market value will be included in the net worth calculation. Assume a residence with a fair market value of $1 million burdened by $950 thousand of debt. Under the proposed language, only $50,000 would be excluded in calculating net worth.