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SEC proposes changes to “accredited investor” definition

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Re: SEC proposes changes to “accredited investor” definition

#21

Post by throw17ebfruary »

ve55 wrote: post #6
travisoneill1 wrote: post #3

The whole thing should be scrapped. This is supposed to be protecting unsophisticated investors, but most of the investments prevented here are equity investments in small businesses. While at the same time anybody is allowed to buy TVIX, a 2x leveraged VIX ETF, which is basically gambling.

There have been considerations to up the requirements of purchasing leveraged ETFs, which go up to 3x. But also keep in mind most people can easily be approved to buy options, and easily lose 100% or more of their net work in hours.

> ...most people can easily be approved to buy options, and easily lose 100% or more of their net work in hours.

How do you lose more than the purchase price of the options when buying options?

Re: SEC proposes changes to “accredited investor” definition

#22

Post by gruez »

travisoneill1 wrote: post #3

The whole thing should be scrapped. This is supposed to be protecting unsophisticated investors, but most of the investments prevented here are equity investments in small businesses. While at the same time anybody is allowed to buy TVIX, a 2x leveraged VIX ETF, which is basically gambling.

>This is supposed to be protecting unsophisticated investors, but most of the investments prevented here are equity investments in small businesses. While at the same time anybody is allowed to buy TVIX, a 2x leveraged VIX ETF, which is basically gambling.

My understanding is that it's supposed to protect investor from fraud (eg. along the lines of ICOs), not necessarily from risky/volatile investments.

Re: SEC proposes changes to “accredited investor” definition

#23

Post by superflit »

KoftaBob wrote: post #12

That's because its less about that and more about allowing a certain income class to have exclusive access to certain kinds of investments. A VC firm that offers nothing more than money (larger % of them than you'd think) doesn't want to compete with tons of syndicates consisting of average retail investors. The "accredited investor" gatekeeping allows them to provide very little value and say "doesn't matter, you ne…

Working for the finance industry.

This is the right answer

Gatekeeping

Re: SEC proposes changes to “accredited investor” definition

#24

Post by nullc »

travisoneill1 wrote: post #3

The whole thing should be scrapped. This is supposed to be protecting unsophisticated investors, but most of the investments prevented here are equity investments in small businesses. While at the same time anybody is allowed to buy TVIX, a 2x leveraged VIX ETF, which is basically gambling.

At least the risk profile of a leveraged ETF is fairly unambiguous and easily discovered. Its very real potential for downside is also matched by a real potential for upside and the available pricing is fair-- even if its risk profile not necessarily matched to your (or anyone elses) financial needs.

I think a bigger risk to investors is dishonest/deceptive marketing and extremely risky and often illiquid investments being peddled as sure deals, including ones where the chance of upside is essentially nil and you're lucky if you break even.

Re: SEC proposes changes to “accredited investor” definition

#25

Post by caro_douglos »

conanbatt wrote: post #5
travisoneill1 wrote: post #3

The whole thing should be scrapped. This is supposed to be protecting unsophisticated investors, but most of the investments prevented here are equity investments in small businesses. While at the same time anybody is allowed to buy TVIX, a 2x leveraged VIX ETF, which is basically gambling.

A walk down r/WallStreetBets shows you that if there is an argument about a gov agency protecting unsophisticated investors, its failing spectacularly.

Still loving that RH glitch which allowed a sophisticated investor to “utilize” more margins than they were entitled to. [1]

There really should be another crack at trading places. I hope those accredited producers out there in Holywoot can make it happen.

[1] https://www.cnbc.com/2019/11/05/some-robinhood-users-were-ab...

Re: SEC proposes changes to “accredited investor” definition

#26

Post by gruez »

sillysaurusx wrote: post #18
kenneth wrote: post #14

Earlier quoted context omitted.

These coin offerings are generally violating securities law.

Which raises the question of whether securities laws are beneficial in this regard.

The SEC has shut down/suspended numerous ICOs. That sounds like they're working to me.

Re: SEC proposes changes to “accredited investor” definition

#27

Post by MR4D »

throw17ebfruary wrote: post #21
ve55 wrote: post #6

Earlier quoted context omitted.

There have been considerations to up the requirements of purchasing leveraged ETFs, which go up to 3x. But also keep in mind most people can easily be approved to buy options, and easily lose 100% or more of their net work in hours.

> ...most people can easily be approved to buy options, and easily lose 100% or more of their net work in hours. How do you lose more than the purchase price of the options when buying options?

I'm not the OP, but I think they meant "trading options" instead of "buying options."

Re: SEC proposes changes to “accredited investor” definition

#28

Post by TheRealSteel »

KoftaBob wrote: post #12

That's because its less about that and more about allowing a certain income class to have exclusive access to certain kinds of investments. A VC firm that offers nothing more than money (larger % of them than you'd think) doesn't want to compete with tons of syndicates consisting of average retail investors. The "accredited investor" gatekeeping allows them to provide very little value and say "doesn't matter, you ne…

Precisely. If the government cared about protecting people from poor investments, they would ban gambling.

Re: SEC proposes changes to “accredited investor” definition

#29

Post by MR4D »

nullc wrote: post #24
travisoneill1 wrote: post #3

The whole thing should be scrapped. This is supposed to be protecting unsophisticated investors, but most of the investments prevented here are equity investments in small businesses. While at the same time anybody is allowed to buy TVIX, a 2x leveraged VIX ETF, which is basically gambling.

At least the risk profile of a leveraged ETF is fairly unambiguous and easily discovered. Its very real potential for downside is also matched by a real potential for upside and the available pricing is fair-- even if its risk profile not necessarily matched to your (or anyone elses) financial needs. I think a bigger risk to investors is dishonest/deceptive marketing and extremely risky and often illiquid investments…

> Its very real potential for downside is also matched by a real potential for upside

This actually isn't true (and that's a big problem).

Leveraged ETFs (such as TVIX) typically are very leaky. [0]

[0] - https://seekingalpha.com/article/1864191-what-you-need-to-kn...

Re: SEC proposes changes to “accredited investor” definition

#30

Post by gruez »

conanbatt wrote: post #5
travisoneill1 wrote: post #3

The whole thing should be scrapped. This is supposed to be protecting unsophisticated investors, but most of the investments prevented here are equity investments in small businesses. While at the same time anybody is allowed to buy TVIX, a 2x leveraged VIX ETF, which is basically gambling.

A walk down r/WallStreetBets shows you that if there is an argument about a gov agency protecting unsophisticated investors, its failing spectacularly.

I think you're misunderstanding the threat model. It's designed to protect unsophisticated investors from fraudsters, not from the investors themselves.
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