Earlier quoted context omitted.
Initiation of force or fraud.
How does the above scenario of limiting who can invest fall under these?
It doesn't. :-)
Initial Coin Offerings Horrify a Former S.E.C. Regulator
171–180 of 194 posts
Re: Initial Coin Offerings Horrify a Former S.E.C. Regulator
#172Earlier quoted context omitted.
It isn't the government's job to "increase participation in the market".
Governments are political beasts, if they are working correctly they respond to the will of the people, and if the people decide that "something must be done about financial scams" they make laws. It's how democracies work
It's how democracies work
And? "Democracies" aren't inherently good, just, noble or virtuous. As the old saying goes "Democracy is two wolves and a lamb voting on what to have for dinner. Liberty is a well-armed lamb contesting the outcome".
Re: Initial Coin Offerings Horrify a Former S.E.C. Regulator
#173Earlier quoted context omitted.
Who's losing their life savings or ending up in financial ruin in this scenario? Also I've never even heard of a "predatory investor", I'm pretty sure you just made that up.
If you are an investor, accreditation rules eliminate 95+% of the population as competition for your investment. That means you will get higher returns and better negotiation terms. Even founders cant invest in their own bethren! Think about that. YC startup founders could get together, talk to each other, and NOT be able to invest in each other. Neither could employees that have access to internal financials. You co…
If you are an investor, accreditation rules eliminate 95+% of the population as competition for your investment. That means you will get higher returns and better negotiation terms.
Actually, for non-startups (i.e., 99% of new businesses), loans from banks, family, and friends, are the primary form of investment. This method of investing does not require the investor to be accredited.
Neither could employees that have access to internal financials.
Investors are also not entitled to internal financials. They might have a right to financial statement, but those are very different things.
Employees get lower wages because there is less capital invested
If the increased capital is coming from employees, then this is just a circular transaction: the money goes from the employee, to the company, back to the employee again = no net financial difference.
Founders get less money In the real world, founders borrow money, which forces them to be calculating and spendthrift with their cash.
Fewer startups are created
Oh no! Juicero would never have existed!...Wait, that's a good thing, and the very existence of Juicero and other wasteful startups suggests that the problem is too much capital, not too little.
Re: Initial Coin Offerings Horrify a Former S.E.C. Regulator
#174Earlier quoted context omitted.
An accredited investor is just a term for someone allowed to invest in things not regulated by the SEC. If you think that EVERYONE should be able to invest in things not regulated by the SEC, you are basically saying that being regulated by the SEC should be completely voluntary (i.e. a company can choose to be regulated or not). You can argue that it should work like that, but we intentionally decided to make SEC re…
Founders, employees, institutional and retail investors got together and voted for the SEC? Are you sure about that?
America is a republic. Founders, employees, institutional, and retail investors got together, voted for Congressional representatives who then wrote the law creating the SEC and investment rules decades ago. In the decades since, Founders, employees, institutional, and retail investors have continued to elect Congressional representatives who have strengthened and broadened those rules.
Re: Initial Coin Offerings Horrify a Former S.E.C. Regulator
#175Earlier quoted context omitted.
You assume there would be no capital flight if there would be a superior finance place in the world?
I think what he disagrees with you about is what constitutes a "superior finance place."
Yeah. My point is that a lot of capital comes to the US (and definitely stays in the US) because of our tight regulatory regime. It's the same way that having a vigorous health department boosts the business of all restaurants: the safer people feel, they more willing they are to throw money around.
Re: Initial Coin Offerings Horrify a Former S.E.C. Regulator
#176Earlier quoted context omitted.
The SEC came into being because without it a bunch of people were being scammed. Which is exactly what we're seeing with ICOs. I don't see what's horrifying.
So it used to be "only white, male landowners are responsible enough to invest" and now its "only the very richest Americans are responsible enough to invest". The SEC is blatantly discriminating. Why can't I sign a piece of paper and accept responsibility for myself? I'm a grown man with 200k+ in assets, I don't need the government to protect me.
If you're a grown man with $200k+ in assets, you appear to qualify to be an accredited investor and you don't need the government to protect you...which is the point of the accredited investor rules. You have the financial resources to absorb a few bad investments/scams. Most people don't have the resources to absorb even one bad investment.
Re: Initial Coin Offerings Horrify a Former S.E.C. Regulator
#177Earlier quoted context omitted.
Each and every one of these regulations exist for a very good reason though. Sure, some of them could use tweaking or reviewing, but throwing then all out at once is no different than gutting the EPA.
> Each and every one of these regulations exist for a very good reason though. Any self-made software engineer with 5-10 years working at startups doesn't have the legal capacity to buy stocks in the company he works at. Think that as an investor, this rule eliminates 95% of your competition. As a founder, you have a much weaker position of negotiation. And as an employee, you have incredibly distorting restrictions…
A software engineer with 5-10 years of experience that doesn't have the financial resources to invest in a company (outside of the stock he is presumably receiving as compensation) has clearly demonstrated a lack of financial intelligence and investment saavy, and probably is the exact type of rube that the accredited investor rules are meant to protect.
And as an employee, you have incredibly distorting restrictions of what you can get and how much because of this rule. Blatantly false. An employee can receive unlimited amounts of stock as compensation. They're simply limited in their ability to expend their own financial resources to acquire stock of non-traded companies.
All harmful regulations exist for very good reasons.
Very true. But this isn't one of the harmful regulations. And even if it is harmful, it prevents significantly more and greater harm than it inflicts.
Re: Initial Coin Offerings Horrify a Former S.E.C. Regulator
#178Earlier quoted context omitted.
I mean, we need regulation because 1929. We need regulation because regulation promotes confidence in the market which increases participation in the market. Security regulation is among the easiest government regulation to justify from a market perspective.
It isn't the government's job to "increase participation in the market".
We can have differing ideas of what a government's job is.
In my opinion, one of the jobs of government is to address clear market failures. On the securities side of things, 1929 was a clear market failure. On the environmental side of things, Love Canal was a clear market failure. The government is in the best position out of any entity to address these failures, to prevent a horde of swindlers from tanking our economy or to prevent some corporate stooges from poisoning elementary school children.
I'm actually fine with the government acting to "increase participation in the market". That's why we try to have a steady 3% inflation, to encourage market participation.
Re: Initial Coin Offerings Horrify a Former S.E.C. Regulator
#179Earlier quoted context omitted.
Co-ops disintegrate when the people involved can't agree on the way to spend the money. Fights break out, trust declines, and eventually the co-op breaks up in a series of acrimonious disputes (oftentimes including lawsuits and/or shady behavior). So far, this seems a common failure mode for ICOs as well. So yeah, like co-ops.
> Co-ops disintegrate when the people involved can't agree on the way to spend the money. That's because currently most co-ops are either run by hippies, or else exist only as tax dodges. But there's no reason they can't be run as dictatorships, the only real requirement is that the majority of the wealth generated gets captured by the people creating it. As the tools for running co-ops get better, we'll see more exa…
If the owners don't have a say in management, it should be a divideng-paying joint-stock corporation, not a co-op. The only reason to form a co-op is to share control, or for management to create an illusion of ownership (as in grocery store co-ops)
Re: Initial Coin Offerings Horrify a Former S.E.C. Regulator
#180Earlier quoted context omitted.
I think the idea of accredited investors is that those investments are very risky, and it limits them to people who can "afford" the risk. An accredited investor may be able to bear the brunt of 9 investments being a total loss, to get to the 10th that hits it out of the park, while a non-accredited investor may have her/his life savings (or a substantial enough part of it) wiped out on the first 1 or 2 deals. I'm no…
The point of accredited investing is to lock the middle class out of the market. If the law was really about "protecting people", then gambling and the lottery would also be illegal. Also, why can't I sign a paper saying I accept the risk of investing? Why can't I become an accredited investor by passing a class? I can pass a series of classes to become an EMT and be trusted with peoples lives, but no classes are suf…
> Also, why can't I sign a paper saying I accept the risk of investing?
You can! All you have to do is lie on your affadavit of accredition, granting you the two things you want: (1) investment in the venture, to (2) no ability to file criminal charges on the venture management if you get fleeced. You do want both of those, right?