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SEC proposes changes to “accredited investor” definition

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Re: SEC proposes changes to “accredited investor” definition

#51

Post by CyanLite2 »

oh_sigh wrote: post #7

It's an interesting name they gave this concept. According to Wikipedia, "accreditation is the process in which certification of competency, authority, or credibility is presented" But to be an accredited investor, all you need to do is have some money. There is no logical way that you can certify that a person's "competency, authority, or credibility" by merely knowing how much money is in their bank account.

No but they would have the financial ability to withstanding speculative investment losses and (theoretically) have the financial means to hire lawyers and advisers to review investments before making them. Otherwise you'd have grade school teachers and firefighters individually risking their entire retirement on a Series A for their brother-in-law's "next sure thing" rather than their pension plan manager doing the due diligence.

Re: SEC proposes changes to “accredited investor” definition

#52

Post by aguyfromnb »

tptacek wrote: post #19
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.

Doesn't accreditation largely influence how securities are marketed? Isn't the liability issue with accreditation on the security seller, and not on the buyer? Why would we want more shady investments marketed to people, even if some what's marketed today turns out to be shady?

Bingo. Look at the fallout from the mortgage crisis/scandals. Buying a house is a straight forward investment. People were getting into mortgages without even understanding basic borrowing rates. In the end we (rightfully in most cases) blamed the brokers for pushing crap on people unknowingly. How is this going to work?

Re: SEC proposes changes to “accredited investor” definition

#53

Post by aguyfromnb »

We are entering the Euphoria stage of the business cycle: Microsoft, Apple, Google and Amazon worth over $5 trillion, while the White House is considering tax benefits so more people can buy stocks and the SEC is ditching investment regulation.

Hang on to your hats!

Re: SEC proposes changes to “accredited investor” definition

#54

Post by SpicyLemonZest »

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…

If retail investor syndicates can successfully compete with VCs, why aren't squads of senior FAANG engineers doing it today? They're comfortably over the accredited investor threshold.

Re: SEC proposes changes to “accredited investor” definition

#55

Post by Ididntdothis »

baybal2 wrote: post #39
kenneth wrote: post #20

Welcome changes to the accredited investor rules. Of course, would love to see them go even further and let just anyone invest — but this is already a step in the right direction. In all my dealings with the SEC (from working at multiple regulated investment platforms, AngelList and Republic, and now as a VC), it's become clear to me that they're extremely pragmatic and want to support innovation and create a level p…

> it's become clear to me that they're extremely pragmatic and want to support innovation and create a level playing field for everyone USA has by far world's most byzantine and bizarre securities laws. To me, this doesn't seem to be going well along that statement.

I think a lot of weirdness in US regulation is because of Congress having lost the ability to make clear headed laws. There is so much friction in the partisan fights that they don’t have time and energy to write clear laws that make sense.

Re: SEC proposes changes to “accredited investor” definition

#56

Post by empath75 »

baybal2 wrote: post #39
kenneth wrote: post #20

Welcome changes to the accredited investor rules. Of course, would love to see them go even further and let just anyone invest — but this is already a step in the right direction. In all my dealings with the SEC (from working at multiple regulated investment platforms, AngelList and Republic, and now as a VC), it's become clear to me that they're extremely pragmatic and want to support innovation and create a level p…

> it's become clear to me that they're extremely pragmatic and want to support innovation and create a level playing field for everyone USA has by far world's most byzantine and bizarre securities laws. To me, this doesn't seem to be going well along that statement.

It also has the most successful stock markets.

Re: SEC proposes changes to “accredited investor” definition

#57

Post by thephyber »

Keverw wrote: post #40

Kinda interesting they limit who can invest in things, yet you can go to the casino or blow all your money on lottery tickets. Seems like just another way for the rich to keep getting richer. Also always found it odd, the age for lottery and casino were different too, at least in the US. 18 for lotto, 21 for casino.

This regulation isn’t designed to protect you from yourself (eg addictive behaviors) or “investments” that are obviously bad for even those without a high school education.

It’s designed to provide some minimal protection against sophisticated fraudsters (eg Bernie Madoff).

SEC doesn’t govern lotto/gambling within states; that happens at a state level, just like alcohol and tobacco.

I agree that the USA tends to have an incoherent stance on age of responsibility versus freedoms, but that’s largely because the federated government system and different states have different ideas about how much freedom/responsibilities their people should have.

Re: SEC proposes changes to “accredited investor” definition

#58

Post by AdamN »

baybal2 wrote: post #39
kenneth wrote: post #20

Welcome changes to the accredited investor rules. Of course, would love to see them go even further and let just anyone invest — but this is already a step in the right direction. In all my dealings with the SEC (from working at multiple regulated investment platforms, AngelList and Republic, and now as a VC), it's become clear to me that they're extremely pragmatic and want to support innovation and create a level p…

> it's become clear to me that they're extremely pragmatic and want to support innovation and create a level playing field for everyone USA has by far world's most byzantine and bizarre securities laws. To me, this doesn't seem to be going well along that statement.

Which countries have less bizarre and byzantine securities laws?

Re: SEC proposes changes to “accredited investor” definition

#59

Post by dragonwriter »

Ididntdothis wrote: post #55
baybal2 wrote: post #39

Earlier quoted context omitted.

> it's become clear to me that they're extremely pragmatic and want to support innovation and create a level playing field for everyone USA has by far world's most byzantine and bizarre securities laws. To me, this doesn't seem to be going well along that statement.

I think a lot of weirdness in US regulation is because of Congress having lost the ability to make clear headed laws. There is so much friction in the partisan fights that they don’t have time and energy to write clear laws that make sense.

> ...Congress having lost the ability to make clear headed laws.

When do you imagine they had such ability, and does much of th Byzantine nature of the securities laws really post-date that period?

> There is so much friction in the partisan fights.

No more than usual, except in the sense that because of the partisan realignment (or two overlapping realignments, one stemming from the New Deal itself, the other from Johnson's signing on to civil rights) from the New Deal until the 1990s the bitter ideological fights were somewhat less often aligned with party boundaries.

Re: SEC proposes changes to “accredited investor” definition

#60

Post by gist »

kenneth wrote: post #20

Welcome changes to the accredited investor rules. Of course, would love to see them go even further and let just anyone invest — but this is already a step in the right direction. In all my dealings with the SEC (from working at multiple regulated investment platforms, AngelList and Republic, and now as a VC), it's become clear to me that they're extremely pragmatic and want to support innovation and create a level p…

> Would love to see them go even further and let just anyone invest

Very broad statement. 'Anyone' in 'any' amount? Surely you are not advocating that. Are you?

In what way do you think the average person 'anyone' knows enough to essentially bet on a typical startup (called it 'gambling')? So you have a typical person living paycheck to paycheck but yes let them put whatever savings they might have into a startup?

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