Looking over it, it seems like it's still highly restrictive.
SEC Modernizes the Accredited Investor Definition
31–40 of 258 posts
Re: SEC Modernizes the Accredited Investor Definition
#32The accredited investor restriction on private equity seems like the most anti-free-market law I've ever heard of. You're not allowed to put your own money into a business unless the government deems you Smart Enough (c) (tm) to do so. If the vast majority of citizens here are not smart enough to invest our own money, then what is all the higher education for? This change sounds like a good one but there's not enough…
This is a pretty clear Chesterton's Fence [1] example. The scams that occurred prior to enacting these standards were massive.
If you want to look at a modern example of such things, consider the cryptocurrency ecosystem and the many scams that occurred [2]
1 - https://en.wikipedia.org/wiki/Wikipedia:Chesterton%27s_fence
Re: SEC Modernizes the Accredited Investor Definition
#33The two big changes: 1. permitting natural persons who have "professional certifications" or "credentials issued by an accredited educational institution". 2. include as accredited investors, with respect to investments in a private fund, natural persons who are “knowledgeable employees” of the fund. Most of the other changes fill in gaps that shouldn't have existed: expanding the definition of spouse and adding orgs…
Do you think "credentials issued by an accredited educational institution" would include things like an MBA? Or even a BA in Business?
I foresee questionable institutions basically selling these creds to eager startup personality types
Re: SEC Modernizes the Accredited Investor Definition
#34The accredited investor restriction on private equity seems like the most anti-free-market law I've ever heard of. You're not allowed to put your own money into a business unless the government deems you Smart Enough (c) (tm) to do so. If the vast majority of citizens here are not smart enough to invest our own money, then what is all the higher education for? This change sounds like a good one but there's not enough…
I guess i would refer you to the brief period of time where cryptocurrencies were skirting these regulations. I'm sympathetic to the argument that there was some value created there, but hoo boy, a lot of people lost a considerable portion of their life savings there.
Re: SEC Modernizes the Accredited Investor Definition
#35The accredited investor restriction on private equity seems like the most anti-free-market law I've ever heard of. You're not allowed to put your own money into a business unless the government deems you Smart Enough (c) (tm) to do so. If the vast majority of citizens here are not smart enough to invest our own money, then what is all the higher education for? This change sounds like a good one but there's not enough…
This is a pretty clear Chesterton's Fence [1] example. The scams that occurred prior to enacting these standards were massive. If you want to look at a modern example of such things, consider the cryptocurrency ecosystem and the many scams that occurred [2] 1 - https://en.wikipedia.org/wiki/Wikipedia:Chesterton%27s_fence 2 - https://twitter.com/patio11/status/1032024732214812673
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Re: SEC Modernizes the Accredited Investor Definition
#36These are good steps, but abolishing all wealth-tests entirely would still be better.
There's no wealth-test that prevents a person from losing all their money in highly-leveraged investments - from real-estate to fancy public-market securities. (Over-leveraging into real estate is practically encouraged by public policy.)
There's no wealth test against putting all one's cash into gambling, which can be arbitrarily worse than even the riskiest non-fraudulent startup investment, depending on your choice of wagers. (Official state lotteries are among the worst games, with the most manipulative marketing - to a level of deception that would generate lawsuits & legislation if attempted by private actors.)
There's no wealth test before purchasing legal but addictive & judgement-impairing substances like alcohol & marijuana.
But if you want to put $5-$20K into a friend's business, or a business you know well, the SEC makes it hard unless you're already a millionaire. It's insanely paternalistic & economically destructive - a ghostly holdout from some bad experiences in another era, the 1930s, when the ranges of available information, experience, and alternative temptations were all tiny & quaint compared to the 2020s.
Re: SEC Modernizes the Accredited Investor Definition
#37The accredited investor restriction on private equity seems like the most anti-free-market law I've ever heard of. You're not allowed to put your own money into a business unless the government deems you Smart Enough (c) (tm) to do so. If the vast majority of citizens here are not smart enough to invest our own money, then what is all the higher education for? This change sounds like a good one but there's not enough…
> then what is all the higher education for?
How exactly does a PhD in Biology help you understand investments?
Re: SEC Modernizes the Accredited Investor Definition
#38Earlier quoted context omitted.
> relatively low traditional income requirements ($200k/yr) $200k/year may be "relatively low" in certain areas, but it borderline unattainable in many parts of the country. People can be smart, and perfectly capable of understanding the risks with offerings in their own industry, without making 200k/year. Don't automatically discredit people with airquotes based on their salary alone. There are also many people who…
Yeah, the $200k/year threshold excludes something like 97% of individual income earners ( https://dqydj.com/income-percentile-by-age-calculator/ ). That's not relatively low, its a significant barrier to entry. Worse, a $200k income in SF or NYC (where an outsized portion of those income earners live) is a different beast when it comes to disposable income if compared to Johnson City, Tennessee. Matt Levine has it ri…
Yes, it is a significant barrier to entry. That is its purpose.
Upper-income households (double the national median) account for 20% (side note: yeah, we have a yawning wealth gap). Those household incomes are $207,400 in 2018. So I'm not going accept your 3% number.
https://www.pewsocialtrends.org/2020/01/09/trends-in-income-...
Re: SEC Modernizes the Accredited Investor Definition
#39This is great for employees of private funds and other things like that. It makes no difference at all to the average person complaining about the accredited investor rules preventing them from investing in sure-fire wins. It really doesn't matter how much of a genius you are at recognizing investment wins. If you can't give them enough cash to finance their operations for a significant period of time, the company is…
It makes no difference at all to the average person complaining about the accredited investor rules preventing them from investing in sure-fire wins.
If it is a "sure-fire win", then individuals don't get to participate in those investments, institutions and people with a lot more money than you have get to participate. As an individual of only moderately high worth, you get the shit portrayed in the movie Boiler Room.
Which is why whining about accredited investor rules annoys me: they can change the rules, but that isn't going to make companies want to deal with your small potatoes. They're not knocking on your door now, why would a rule change make any difference? Even if you cross the magic threshold, opportunities will not immediately knock on your door out of the blue. But if you want dents in your door from all the knocking, up your net worth from single-digit millions to double-digit.