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SEC Modernizes the Accredited Investor Definition

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Re: SEC Modernizes the Accredited Investor Definition

#171

Post by gojomo »

m0zg wrote: post #143
gojomo wrote: post #36

These 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 w…

It's not really a "wealth test". It's more of a "is this person likely to have proper legal counsel" test. Or at least that's how I understand its intent.

The 'accredited investor' definition is absolutely & literally a "wealth test".

It does not ask if you have legal counsel. Indeed, even being an investment-specialized, bar-licensed lawyer yourself, drafting agreements upon which other 'accredited investors' depend, wouldn't make you 'accredited'!

But having $1,000,000 in the bank would. Prior wealth.

Re: SEC Modernizes the Accredited Investor Definition

#172

Post by gojomo »

tick_tock_tick wrote: post #116
gojomo wrote: post #89

Earlier quoted context omitted.

But an MBA who's a millionaire is competent to do any amount of private-investing? And an MBA who's not a millionaire isn't competent to do any private investing, even with just a small amount of their own money? Why should their net-worth be legally dispositive?

The millionaire can fuck up a few times and still be fine that's the real difference.

Only if they're wise enough to leave themself that wiggle room. It's a binary test, the 'accredited' can risk any amount.

So why not let anyone take a proportionate risk?

Re: SEC Modernizes the Accredited Investor Definition

#173

Post by pc86 »

mywittyname wrote: post #142
Ericson2314 wrote: post #127

Earlier quoted context omitted.

I'm OK with these sorts of "in defense of us all" regulation, but I think the wealth test in particular is a bit perverse. I think this "anti-classism" critique is better than the libertarian critique.

Regulations are written in blood. We didn't have rules, then something extremely bad happened to make people say, "that should be illegal." So it's made illegal. A generation passes and young people look at said regulations, think, "that's a stupid rule," and they revoke it. Goto 10. Investments that require you to be accredited are often pretty bad ones. All the great opportunities get cherry-picked by those with th…

This is true for something like the FAA's FARs where they're trying to save lives.

It is absolutely not true of every nonsensical paternialistic nonsense Congress has passed.

Re: SEC Modernizes the Accredited Investor Definition

#174

Post by SomewhatLikely »

cryptica wrote: post #168
elamje wrote: post #149

My biggest problem with this is that I have had multiple opportunities as a young professional to invest in my friends’ small funds, only to be turned away at the last minute when they decided to only accept accredited investors. On the other hand, I could participate in sh*tcoin ICO’s, get rich quick “courses”, and become a real estate “investor” by attending presentations at a Holiday Inn conference room. The law a…

Of course, to people outside of the US, what was going on in the US was obvious. They should just get rid of these socialist laws which are supposedly designed to protect your comrades but which actually serve the interests of a small number of politically connected elite by hindering mobility... Let's face it, what you have in the US is textbook communism. It's ironic that Russia today is more capitalist than the US…

Regulation is tantamount to communism and socialism? Ownership is still private in the US but has rules on what can be done. Russia has state ownership in many of that country's companies.

Re: SEC Modernizes the Accredited Investor Definition

#175

Post by gojomo »

asah wrote: post #107
gojomo wrote: post #46

Earlier quoted context omitted.

It's been discussed, so it's definitely thinkable. And if getting an accredited-institution MBA, for tuition payments of anywhere from $22K to $200K, after about 17 years of other education (K-12, undergrad) isn't enough for someone to protect their own wealth from scams, what's the point of all that credentialing, anyway?

Ah yes, Joe Schmoe's One Weekend Online "Executive" MBA, no GED required.

Are those academically-accredited?

Re: SEC Modernizes the Accredited Investor Definition

#176

Post by refurb »

chrisco255 wrote: post #74
refurb wrote: post #29

Earlier quoted context omitted.

like the most anti-free-market law I've ever heard of Do you know why the SEC created these rules? If you understand the history it makes a lot of sense.

The world is quite a different place in 2020 than in 1933. We have access to unlimited digital forms of risk to speculate on as it is. It used to be seen as necessary to have taxi licenses in order to have trusted drivers who wouldn't scam out-of-towners. It turns out you can replace all that regulation with an online review system plus mobile GPS and payment app (Uber / Lyft). Similar innovations are being held back…

The existence of other risks isn't a strong argument for introducing more risks.

It's easy for HN to say "this makes no sense", but I guarantee you if the rules changed we'd see some article in the NYTimes where some retiree lost their entire life savings in a private investment including quotes like "no one told me it was that risky".

Re: SEC Modernizes the Accredited Investor Definition

#178

Post by Ericson2314 »

mywittyname wrote: post #142
Ericson2314 wrote: post #127

Earlier quoted context omitted.

I'm OK with these sorts of "in defense of us all" regulation, but I think the wealth test in particular is a bit perverse. I think this "anti-classism" critique is better than the libertarian critique.

Regulations are written in blood. We didn't have rules, then something extremely bad happened to make people say, "that should be illegal." So it's made illegal. A generation passes and young people look at said regulations, think, "that's a stupid rule," and they revoke it. Goto 10. Investments that require you to be accredited are often pretty bad ones. All the great opportunities get cherry-picked by those with th…

My preferred solution is UBI + no gambling with the UBI rule. Similar effect in this area (ignoring all the other wonderful benefits a UBI has) but without the nastiness of a net worth rule.

Re: SEC Modernizes the Accredited Investor Definition

#179

Post by colordrops »

alasdair_ wrote: post #103
colordrops wrote: post #80

Earlier quoted context omitted.

It's a matter of principle though. You don't restrict the freedom of individuals to protect them from other individuals that are bad actors. You go hard and strong after the bad actors. What other examples of laws outside of finance can you cite where individuals are restricted in order to protect them from other bad actors? It's absurd and not in the scope of what government should be doing.

>What other examples of laws outside of finance can you cite where individuals are restricted in order to protect them from other bad actors? Pretty much any consumer safety or mandatory licensing law. Even something as simple as buying a beer - we insist that legal adults are not allowed to buy a beer until they are older. We insist that adults must be over 21 to buy a handgun in many states, or that (in other state…

Every one of your examples are of the case of protecting the individual from hurting themselves or others. This is quite different from the question, which is to cite a law that restricts someone in order to protect them from others.

Re: SEC Modernizes the Accredited Investor Definition

#180

Post by colordrops »

aaronblohowiak wrote: post #96
colordrops wrote: post #80

Earlier quoted context omitted.

It's a matter of principle though. You don't restrict the freedom of individuals to protect them from other individuals that are bad actors. You go hard and strong after the bad actors. What other examples of laws outside of finance can you cite where individuals are restricted in order to protect them from other bad actors? It's absurd and not in the scope of what government should be doing.

> What other examples of laws outside of finance can you cite where individuals are restricted in order to protect them from other bad actors? Controlled substances (ie: prescriptions,)

That's not why drugs are illegal. In fact you'd be far more protected from bad actors if they were legalized.
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