Someone have the TLDR?
SEC Modernizes the Accredited Investor Definition
111–120 of 258 posts
Re: SEC Modernizes the Accredited Investor Definition
#112These 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…
"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."
What do you mean? Individuals are still allowed to sign contracts. So write up a specific contract.
Re: SEC Modernizes the Accredited Investor Definition
#113Earlier quoted context omitted.
Perhaps it doesn't, but that's the point. Education should prepare you to engage with society gainfully. If one makes it through 20 years of rigorous school but at no point acquired the necessary cognitive skills to discern scams from legitimate opportunities, then the education itself is the scam.
The most obvious scams should be easy to identify, but if you think about how easy it is for even "accredited investors" to lose a lot of money. Just look at the list of people affected in Madoff's Ponzi Scheme⁰ Based on this evidence and many similar cases, I'm entirely in favor very stringent rules on who gets to place big bets on financial securities. __________ 0. https://en.wikipedia.org/wiki/Madoff_investment_s…
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Re: SEC Modernizes the Accredited Investor Definition
#114These 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…
There's a strong financial incentive for the market to engage in fraudulent activities against investors. And the smaller the investor, the greater then incentive. Public companies have regulations that help prevent such fraud by requiring things such as audits by third party accounting firms, and regulating how these audits may be performed. Such regulations came about specifically as the result of fraud committed b…
But isn't it also the SECs job to punish those who commit fraud against investors?
In my mind it is like the NYPD making it illegal to walk down the street at night unless you are 6'2" or above, or have trained in martial arts. After all, there are a lot of people out there who would want to take advantage of a weaker, easier target. And it also just happens to make the NYPDs job easier.
Re: SEC Modernizes the Accredited Investor Definition
#115Am i the only one who thinks we are not giving credit to Trump administration for more de-regulation specifically this one? Relaxing the regulation to be fair.
Rule 14 ^^
Re: SEC Modernizes the Accredited Investor Definition
#116Earlier quoted context omitted.
An MBA is not a licensure. There are overlaps between what an MBA and an accountant may have studied, but the CPA is what gives you a license. Lots of MBA students do not pursue financial courses beyond what is requires to pass. They may have interests in marketing, innovation, or other areas. They can be ill-equipped to deal with investments. The same pattern exists for law and many other professions. There are plen…
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.
Re: SEC Modernizes the Accredited Investor Definition
#117The 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.
How many people lost money in cryptocurrency scams compared to the entirely legal and rule-following housing market crash of 2008?
Re: SEC Modernizes the Accredited Investor Definition
#118Earlier quoted context omitted.
> 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. Over the last 90 years we have repeatedly learned very difficult lessons about the individual and societal costs of unregulated securities markets and made change…
> Our securities markets work According to what standard? Is the fact that I can’t invest $5000 in my friend’s startup an example of our securities markets “working”? Not according to any rationally justifiable standard. Certainly the impulse to protect grandma’s life savings from predatory fraud is a good one. But the proper way to better society is through empowering individuals to make better decisions. An example…
What exactly is stopping you from investing $5000 in your friend's startup?
Re: SEC Modernizes the Accredited Investor Definition
#119These 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 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. Over the last 90 years we have repeatedly learned very difficult lessons about the individual and societal costs of unregulated securities markets and made change…
>Over the last 90 years we have repeatedly learned very difficult lessons about the individual and societal costs of unregulated securities markets and made changes to mitigate those risks.
And then mostly dismantled those changes, in an environment when financial entities have more reach and capital to spin into dubious schemes than ever before. What could possibly go wrong?
Re: SEC Modernizes the Accredited Investor Definition
#120Earlier quoted context omitted.
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.
How many people lost money in cryptocurrency scams compared to the entirely legal and rule-following housing market crash of 2008?
Much of the losses in 2008 were caused by illegal and non-rule-following activity.