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Does this concept of "accredited investor" exist under current law in the US? The article seems to imply that it does. If so, does it apply to both equity and
by Gormo 17y ago
Does this concept of "accredited investor" exist under current law in the US? The article seems to imply that it does. If so, does it apply to both equity and debt funding?
I've never heard of such a thing, or any kind of legally-imposed qualification requirements for one private party to lend/give money to another. If this exists and is enforced, I'm astonished that it hasn't attracted a great deal of outrage.
The article also talks about SEC involvement in auditing startups. What authority does the SEC have to intervene in a business that isn't publicly traded? What if I'm seeking private funding for a startup that I have no intention of ever taking public? And even if I do at some point decide to go public, how would the SEC become involved before I start planning my IPO?
- _delirium 17y agoThe concept does exist, and is essentially an exception to some of the normal securities laws: if you offer stock only to accredited investors, you're exempt from some of the registration/reporting requirements, on the theory that those requirements are intended primarily to protect non-sophisticated investors, so are unnecessary if you have only sophisticated investors. See: http://www.sec.gov/answers/accred.htm http://www.sec.gov/answers/accred.htm Nobody's actually prevented from accepting non-accredited investors, but if you do, you have to comply with the registration/reporting requirements, which many startups don't want to do.