Might civil unions count when applying the "combined with spouse" accredited investor thresholds?By http://profile.typepad.com/1237764140s22740 // July 1, 2013 in "Spouse", Accredited Investor Definition
Still thinking about Doug Cornelius' post on what happens to the accredited investor definition following the Supreme Court's overturning of Section 3 of the Defense of Marriage Act. In particular, whether a party to a civil union is a "spouse" for purposes of the accredited investor definition under Rule 501 of Regulation D.
We know that parties to marriages count as spouses. Full stop. The SEC need not engage in rulemaking on this point, as the reference to "spouse" in Rule 501 reverts back to its natural meaning, now that the attenuated and mean-spirited gloss imposed by Section 3 of DOMA has been stricken down for violating the US Constitution.
But might parties to other domestic relationships also be "spouses" for purposes of meeting the accredited investor standard?
Doug's post cites an Illinois statute which appears to say that parties to a civil union in that state must be legally regarded as "spouses" to one another.
I'm no expert on the Illinois civil union statute, but this statement of "purposes" and "rules of construction" in the Illinois Religious Freedom Protection and Civil Union Act, Section 5, suggests that in Illinois, at least, a person in a civil union is a "spouse" to her or his partner in the union:
"This Act shall be liberally construed and applied to promote its underlying purposes, which are to provide adequate procedures for the certification and registration of a civil union and provide persons entering into a civil union with the obligations, responsibilities, protections, and benefits afforded or recognized by the law of Illinois to spouses."
Now, I understand that many people in Illinois are challenging the state's continuing ban on same-sex marriage as a violation of the state constitution. See this complaint and this webpage, "How Civil Unions Have Failed."
It's been not even a week since the Supreme Court's decision on DOMA, and I've already heard hours of analysis - most of it really good - on Justice Kennedy's opinion, how it is going to be quoted and cited in state court challenges, like the one brought in Illinois, to overturn bans on same-sex marriages.
But whatever the destiny of the opinion in Windsor for shaping the legal recognition and equal protection of same-sex marriage across the United States, the holding of the case really only requires the federal government to honor and give effect to what states have to say about who can and cannot be married. The federal government has no business demeaning a marriage that is lawful.
The holding (in contrast, perhaps, to the broader discussion in the opinion that speaks to equal protection) of the case is so centered in federalism, that it may actually be necessary for the federal government to defer to laws, like Illinois', which, while withholding marital status from same-sex couples, nevertheless expressly confers spousal status on the partners.
In Illinois, at least, I think the better argument may well be that a party to a civil union may indeed combine her income or net worth with that of her civil union partner - her spouse, according to Illinois law - when meeting the accredited investor definition. It would be great to engage with an Illinois lawyer on this point.
Photo, "Illinois Governor Pat Quinn with Newlyweds Jim Darby and Patrick Bova," by John W. Iwanski / Flickr.