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The SEC Just Voted To Lift The Ban On General Solicitation

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Re: The SEC Just Voted To Lift The Ban On General Solicitation

#91

Post by diminoten »

Dylan16807 wrote: post #70
diminoten wrote: post #51

Earlier quoted context omitted.

We could use this argument to remove warning labels from all dangerous things. If you want to drive your vehicle without a seatbelt, who am I to force you to? Your seatbelt choices have no impact on anyone else except you, right?!

People without seatbelts often end up in emergency rooms at public expense. People with bad investments won't often end up on welfare from their decisions.

Can you show this to be the case, or should I just take your word for it that bad investments don't have any negative impact on society?

Re: The SEC Just Voted To Lift The Ban On General Solicitation

#93

Post by mortehu »

clavalle wrote: post #71
wwweston wrote: post #46

Earlier quoted context omitted.

> But 2013 isn't 1933. The average sophisticated investor is more versed in finance, more wary of solicitation if they are not, or closer to one of the former. "This time, it's different." http://www.reinhartandrogoff.com/

I think things are fundamentally different now than in the early 30's. Not pie in the sky 'well people are more sophisticated now' different. There are a ton of tools that people can use to gather information on a potential investment and the people involved.

While it's easier to be smart about investing, it's also very easy to not be smart. I'm pretty sure most retail investors invest with zero or negative[1] information advantage, but don't lose a lot of money because the median expected value of investment opportunities open to the public is positive.

1. Due to cognitive biases.

Re: The SEC Just Voted To Lift The Ban On General Solicitation

#94

Post by badclient »

7Figures2Commas wrote: post #82
jmj42 wrote: post #73

Earlier quoted context omitted.

While it's not _necessarily_ true, it is possibly true, and that's the bit that folks are latching on to. They're assuming that there's a "market" of investors who are both interested in and willing to diversify their investment portfolio by, in part, making smaller high risk investments. My experience with, admittedly smaller investment firms, is that this may be true. Organizations like IllinoisVENTURES (I know sev…

I wish somebody had alerted me when a few guys in a Harvard dorm needed capital to pay the hosting bills for their new social network! My missed opportunity to take a huge equity stake in Facebook for $20,000 aside, what you're referring to is the quality of deal flow of an existing investment firm. There is no shortage of investors already actively involved in funding startups who wish they could have invested in a…

Although I wouldn't be surprised if somebody somewhere has a list of accredited investors over the age of 80 who are likely to have Alzheimer's, that is not going to happen in significantly larger numbers as a result of this change.

There is an entire industry dedicated to this based out of New York. It gets hungry guys in early 20s to wake at 8am and begin cold calling high net-worth individuals offering them "investment opportunities". This industry flourished before the Internet and is depicted in movies like Boiler Room. The internet ate up a lot of their business because people no longer needed to be on walstreet to get data from walstreet. However, I can see these guys jump on this opportunity and begin shilling startups to the relatively high net-worth but naive retirees wanting to invest in the next facebook.

Re: The SEC Just Voted To Lift The Ban On General Solicitation

#95

Post by Dylan16807 »

diminoten wrote: post #91
Dylan16807 wrote: post #70

Earlier quoted context omitted.

People without seatbelts often end up in emergency rooms at public expense. People with bad investments won't often end up on welfare from their decisions.

Can you show this to be the case, or should I just take your word for it that bad investments don't have any negative impact on society?

I don't know of any studies on the subject, I'm just reasoning that if you have enough money to do actual long-term investment you must have some form of income, so if it falls through you still have income. It's not like gambling where you can addictively throw away every dollar you have in a day. If you 'invest away' all your money, you can uninvest it the next day.

Also: It's not 'negative impact' as a binary check, but looking at the massive cost of medical bills. And seatbelts are enforced on public roads, not private land. Investment is fundamentally a private action, which should only be restricted in very serious circumstances.

Re: The SEC Just Voted To Lift The Ban On General Solicitation

#96

Post by diminoten »

Dylan16807 wrote: post #95
diminoten wrote: post #91

Earlier quoted context omitted.

Can you show this to be the case, or should I just take your word for it that bad investments don't have any negative impact on society?

I don't know of any studies on the subject, I'm just reasoning that if you have enough money to do actual long-term investment you must have some form of income, so if it falls through you still have income. It's not like gambling where you can addictively throw away every dollar you have in a day. If you 'invest away' all your money, you can uninvest it the next day. Also: It's not 'negative impact' as a binary chec…

> It's not like gambling where you can addictively throw away every dollar you have in a day.

It's not?

> If you 'invest away' all your money, you can uninvest it the next day.

Not if it's gone.

Re: The SEC Just Voted To Lift The Ban On General Solicitation

#97

Post by Dylan16807 »

diminoten wrote: post #96
Dylan16807 wrote: post #95

Earlier quoted context omitted.

I don't know of any studies on the subject, I'm just reasoning that if you have enough money to do actual long-term investment you must have some form of income, so if it falls through you still have income. It's not like gambling where you can addictively throw away every dollar you have in a day. If you 'invest away' all your money, you can uninvest it the next day. Also: It's not 'negative impact' as a binary chec…

> It's not like gambling where you can addictively throw away every dollar you have in a day. It's not? > If you 'invest away' all your money, you can uninvest it the next day. Not if it's gone.

Actual investment (to be distinguished from day-trading) is not an addictive action. There is no feedback loop.

What crazy definition of investing are you using where you have any reasonable* chance of losing all your money in less than a day?

Compare that to the near-100% chance of losing your money if you spend a single hour betting all of it at casino games.

*let's say 1% or greater

Re: The SEC Just Voted To Lift The Ban On General Solicitation

#98

Post by lmm »

sageikosa wrote: post #60
qdog wrote: post #41

Earlier quoted context omitted.

He's insinuating that people should be allowed to do whatever they want with their money and that any protection via regulation must be bad. However, if you are someone who isn't an arbitrager(investor isn't the right term) in their daily job, the pressure to join the tulip buyers is a lot heavier than the available knowledge. The root of this problem is lies, because the tulip sellers are always going to give false…

> yet you hear stories about the Maddoff's of the world running 30 year schemes which very much hit 'sophisticated' investors. Proving that the scam artists will find a way no matter what the regulations say.

But thanks to the regulations Madoff only hit people who could afford to lose it, not those for whom who losing the money would force them onto the streets.

Re: The SEC Just Voted To Lift The Ban On General Solicitation

#99

Post by lmm »

jsams wrote: post #86
jplewicke wrote: post #53

Earlier quoted context omitted.

The "club" would have to have at least $5 million in assets, according to current SEC guidance: http://www.sec.gov/answers/accred.htm .

Actually, 501 already requires that the indivual investors of the 'club' also be accredited, and the club cannot be formed for the purposes of 'an' investment. However, a group of engineers could form an entity and each become active managers, and their club is able to accept funds from the engineers via a 4(2) exemption under the '33 Act. Then, so long as they didn't run afoul of the '40 Act, they could invest so lo…

So what, write a short story and value it at $5m? Surely there are laws about market valuation, even for IP?

Re: The SEC Just Voted To Lift The Ban On General Solicitation

#100

Post by sageikosa »

lmm wrote: post #98
sageikosa wrote: post #60

Earlier quoted context omitted.

> yet you hear stories about the Maddoff's of the world running 30 year schemes which very much hit 'sophisticated' investors. Proving that the scam artists will find a way no matter what the regulations say.

But thanks to the regulations Madoff only hit people who could afford to lose it, not those for whom who losing the money would force them onto the streets.

Thanks to the regulations, there were suckers who assumed that someone else was ensuring things were copacetic. Foxes hunt in the chicken coop if one is available, and wolves go for the sheep pen if they can find one.
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