Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Sorry Purism, I’m not investing. It’s (possibly) not even legal

gabrielsieben.tech

Post reply on HN
Print view View original

11–20 of 97 posts

Re: Sorry Purism, I’m not investing. It’s (possibly) not even legal

#11

Post by jmillikin »

andrewflnr wrote: post #9
OrvalWintermute wrote: post #3

> a 21-year-old software developer In the past I have seen self-certification for Accredited Investor status, as well as out-sourced services that verify some data for a determination. I think response around what is legal or not is best left to those with a background and education in the legal profession.

> what is legal or not is best left to those with a background and education in the legal profession Tangent, but I just want everyone to recognize how obscenely absurd this (largely true) sentence is. How are we, the vast bulk of non-law-school-graduates, supposed to follow the law in our day to day lives if just figuring out what's legal literally requires multiple college degrees?

Many people posting on the internet have this strange idea that American law is opaque and difficult to understand, but in general it's actually pretty accessible. If you can read software, you can read American legal documents.

The reason lawyers get paid so much is that if you're doing something that is right on the boundary[0] then the difference between legal and illegal might be extremely fuzzy, and also worth a lot of money, so it's worth paying someone $1000 an hour to write a long brief in your local judge's preferred WordPerfect template about why what you're doing is OK.

On the other hand, the SEC website linked by OP just has a checklist of Accredited Investor qualifications, and it's possible to read them. Do you have a salary of $300,000? You qualify. Did you make $195,000? Well, that's less than $200,000 so unless one of the other checkboxes matches, you're out of luck[1].

[0] Maybe it's illegal by the letter of the law but you think it shouldn't be, like ride-sharing in locations with taxi regulations. Or maybe it's not illegal but might be viewed with extreme skepticism by regulators, like offering a non-fraudy Bitcoin exchange. In both of those cases, there's an easy solution (just don't do the maybe-illegal thing) that is accessible to the layman.

[1] Maybe you can hire a lawyer and/or CPA to get your $6000 of undeclared dog-walking income counted for the purposes of Accredited Investor qualification, but is it really worth the hassle?

Re: Sorry Purism, I’m not investing. It’s (possibly) not even legal

#12

Post by matrix_overload »

Oh, shit. This sounds like a non-financial person (an engineer?) acting out of desperation, trying to plug a financial hole. Without realizing that they are breaking very serious securities rules, and SEC will be in their full right to shut the entire business down.

I wish they would talk to a good accountant first. I believe they have good intentions, but this could cost them more than they think.

Re: Sorry Purism, I’m not investing. It’s (possibly) not even legal

#14

Post by matrix_overload »

zoklet-enjoyer wrote: post #10

The whole accredited investor thing is bullshit

It's not. It serves as a counterbalance to much lighter reporting/auditing requirements for private vs. public companies.

It's way easier for a private company to do some creative accounting and do away with your money without committing a criminally punishable offence. The idea is that if you have $1M in assets, you can tolerate that risk (or do your own due diligence), but if your entire life savings is something like $50K, don't give them to that sleazy guy on the phone that isn't independently audited or banned from pump-and-dumping his own stock.

Re: Sorry Purism, I’m not investing. It’s (possibly) not even legal

#15

Post by quesera »

gjsman-1000 wrote: post #8
jmillikin wrote: post #7

Earlier quoted context omitted.

There's nothing wrong with someone pointing out that something is illegal, for example I don't have to be a lawyer to note that stealing a car would violate criminal law. It's reasonable for the OP to note that if they were to invest in that deal, then someone must be breaking the law. Note also that what you call "self-certification" is just ... it's how things are for everyone? It's not like you can ask the SEC for…

Right. I am not a lawyer (writer here), but read this page (as called out in the article) about Rule 506(c). https://www.sec.gov/education/smallbusiness/exemptofferings/... The requirement they seem to follow is: "all purchasers in the offering are accredited investors and the issuer takes reasonable steps to verify purchasers’ accredited investor status" Purism argues that everyone must be an accredited investor; bu…

I've seen these "reasonable steps" devolve to requiring the purchaser to explicitly state that they qualify in a legal document (contract).

Re: Sorry Purism, I’m not investing. It’s (possibly) not even legal

#16

Post by glenngillen »

gjsman-1000 wrote: post #8
jmillikin wrote: post #7

Earlier quoted context omitted.

There's nothing wrong with someone pointing out that something is illegal, for example I don't have to be a lawyer to note that stealing a car would violate criminal law. It's reasonable for the OP to note that if they were to invest in that deal, then someone must be breaking the law. Note also that what you call "self-certification" is just ... it's how things are for everyone? It's not like you can ask the SEC for…

Right. I am not a lawyer (writer here), but read this page (as called out in the article) about Rule 506(c). https://www.sec.gov/education/smallbusiness/exemptofferings/... The requirement they seem to follow is: "all purchasers in the offering are accredited investors and the issuer takes reasonable steps to verify purchasers’ accredited investor status" Purism argues that everyone must be an accredited investor; bu…

I am not a lawyer, but I am apparently an "accredited investor". I have, multiple times, had to pay my accountant to generate a document where he attests that I meet the criteria to be considered an accredited investor so that I could invest in some startup. Easiest money my accountant ever makes. And the effort for the startup/founders is "sorry, we can't send you a term sheet until we get a certification of your accredited investor status from a licensed tax professional. We hope you understand". For Purism to claim it's impossible to do this is demonstrably bullshit.

Re: Sorry Purism, I’m not investing. It’s (possibly) not even legal

#17

Post by tastyfreeze »

matrix_overload wrote: post #14
zoklet-enjoyer wrote: post #10

The whole accredited investor thing is bullshit

It's not. It serves as a counterbalance to much lighter reporting/auditing requirements for private vs. public companies. It's way easier for a private company to do some creative accounting and do away with your money without committing a criminally punishable offence. The idea is that if you have $1M in assets, you can tolerate that risk (or do your own due diligence), but if your entire life savings is something l…

It isn't the government's responsibility to protect people from their own mistakes. Accredited investor laws only serve as a gate keeping mechanism.

Re: Sorry Purism, I’m not investing. It’s (possibly) not even legal

#18

Post by im3w1l »

I've been considering getting a Librem 5 but I'm just not comfortable with a huge lead time. Ironically if I would have ordered one when I first considered it I would probably have had it a long time ago. I'm not good at planning...

If they are indeed panicing, I'm surprised they managed to end up in that state even as they are unable to keep up with demand. Unless this whole thing with being out of stock permanently is an intentional strategy to reduce risk of unsold inventory?

Re: Sorry Purism, I’m not investing. It’s (possibly) not even legal

#19

Post by digi59404 »

jmillikin wrote: post #11
andrewflnr wrote: post #9

Earlier quoted context omitted.

> what is legal or not is best left to those with a background and education in the legal profession Tangent, but I just want everyone to recognize how obscenely absurd this (largely true) sentence is. How are we, the vast bulk of non-law-school-graduates, supposed to follow the law in our day to day lives if just figuring out what's legal literally requires multiple college degrees?

Many people posting on the internet have this strange idea that American law is opaque and difficult to understand, but in general it's actually pretty accessible. If you can read software, you can read American legal documents. The reason lawyers get paid so much is that if you're doing something that is right on the boundary[0] then the difference between legal and illegal might be extremely fuzzy, and also worth a…

This isn’t really true. The law as written might be easily understood by reading it. But that is not the entire story.

The US has multiple forms of law, Legislative Law, as ratified by the Legislative Body. Then Case Law which is law introduced by Judicial courts which may or may not invalidate, expand, or change the legislative law. The US also has courts under specific bodies such as the EPA.

Lawyers exist to be able to tell you “the law says x, however the most common case law actually says Y.” In terms of investor, patent, and IP law this is SIGNIFICANT. You could be violating the investment laws enacted by the legislature; but it could be entirely legal because a court in your district invalidated that law. However, you fly to New York, a different district, and it’s illegal again.

Determining what is legal and what is illegal can be exceptionally difficult. Because the layman doesn’t have access to the thousand dollar monthly subscription of LexusNexus to do case law searches. They probably don’t even know that this exists.

Another example - California has a law on the books that states that you’re not allowed to own batons and nunchucks….. Except in Yuba County, where a Judge has thrown out the law via a court case, and the DA never appealed the ruling. But if you’re arrested by the CHP, instead of the Sheriff they can try you in State Court, and it applies again.

Re: Sorry Purism, I’m not investing. It’s (possibly) not even legal

#20

Post by maven29 »

zkirill wrote: post #2

I am curious if there is a market for a "get things done" phone that runs a RTOS like the old BlackBerries and prioritizes LTS and operational efficiency above all else. Given startup cost I assume it would be in the US$3,000+ range which is not crazy for an "essential to business" device with guaranteed 10 year support and would still be far cheaper than something like Vertu.

Nokia sells 4g feature phones in both mediatek RTOS and KaiOS (firefox OS derivative) variants. The latter can run whatsapp, although feature support is a bit behind.

Unfortunately, QWERTY versions would not enjoy the same scale of economy, mostly due to dexterity requirements that would alienate the usual target audience.

Post reply on HN