9 ms·

I think the idea of accredited investors is that those investments are very risky, and it limits them to people who can "afford" the risk. An accredited investo

I think the idea of accredited investors is that those investments are very risky, and it limits them to people who can "afford" the risk. An accredited investor may be able to bear the brunt of 9 investments being a total loss, to get to the 10th that hits it out of the park, while a non-accredited investor may have her/his life savings (or a substantial enough part of it) wiped out on the first 1 or 2 deals. I'm not saying it's perfect - there's certainly an element of "the rich get/stay richer" too - but just that there's some kind of rationale for the rules (as I understand it anyway).

ghaff 9y ago
That and a lot of people really aren't qualified to judge the risk and fall victim to "You can't lose!" scams. Being rich is no guarantee of financial sophistication of course but there's some correlation. And, as you say, they're less likely to be wiped out even if they lose their investment. I agree it's not a perfect system and people who want to can find other ways to throw away their money. But we're probably not guilty of over-regulating financial markets in general.
- smokeyj 9y ago
  > I agree it's not a perfect system I think it's a great system. But I also hate poor people and don't want them to have the same opportunities I have. Let them play the lottery instead right?
  - ghaff 9y ago
    For me personally, state lotteries work great. They're a very regressive tax. I also don't like them much and appreciate that, at least in my state, advertising and promotion was largely phased out. [ADDED: In case anyone missed the sarcasm I'm not a huge fan of state lotteries because they target the people who can least afford them. That said, I realize many buyers would go the less regulated route if they didn't exist.]
wtfrmyinitials 9y ago
I don't need the government to protect me from myself. Adults should be able to make their own decisions
- exogen 9y ago
  Predatory companies love people like you. Now people have lost their homes and grandparents are being swindled out of their retirements – good thing the government allowed companies to do whatever they want! Corporations are awesome! It was pretty cool when the banks told people they were qualified for loans, knowing they shouldn't be, then used that to their advantage to steal those people's houses. Fuck the government, am I right???
  - conanbatt 9y ago
    Predatory investors love people like you. They get higher returns and much better negotiation power because some people advocate to take down their competition!
    - exogen 9y ago
      Who's losing their life savings or ending up in financial ruin in this scenario? Also I've never even heard of a "predatory investor", I'm pretty sure you just made that up.
      - conanbatt 9y ago
        If you are an investor, accreditation rules eliminate 95+% of the population as competition for your investment. That means you will get higher returns and better negotiation terms. Even founders cant invest in their own bethren! Think about that. YC startup founders could get together, talk to each other, and NOT be able to invest in each other. Neither could employees that have access to internal financials. You could believe your company is doing great, but you cannot invest. You dont have the chance to compete for the resource with the investors that can. This also means less money goes into investment. Result: - Qualified investors get higher returns - Employees get lower wages because there is less capital invested - Founders get less money - Fewer startups are created In the name of protecting compulsive gamblers?
summer_steven 9y ago
The point of accredited investing is to lock the middle class out of the market. If the law was really about "protecting people", then gambling and the lottery would also be illegal. Also, why can't I sign a paper saying I accept the risk of investing? Why can't I become an accredited investor by passing a class? I can pass a series of classes to become an EMT and be trusted with peoples lives, but no classes are sufficient to educate me about investing in startups. When you look at how the accredited investor laws are structured, its clearly meant lock the middle class out of the market
- vel0city 9y ago
  FWIW, in most of the US gambling is illegal and lotteries are often regulated by the State.
  - maxerickson 9y ago
    There's loads of casinos though: https://www.worldcasinodirectory.com/united-states/map https://www.worldcasinodirectory.com/united-states/map And aren't states mostly the beneficiaries of lotteries? Here the revenue is supposed to go to schools or something.
    - vel0city 9y ago
      That source is pretty questionable. I'm pretty familiar with Texas' gambling laws so I was surprised to see so many "casinos" in Texas. Upon further review, many of those points are improperly placed, with actual casinos being out of state but simply matching a partial address. I'd take that map with a massive grain of salt, as chances are a high percentage of points are probably wrong. Of the three casinos near DFW, two are out of state with the third being a horse racing track. The one outside Austin really exists in Indiana. It also shows cruise ships, which usually don't begin gambling until they're well offshore. I'm not going to deny there are many casinos (there are plenty) but the OP's statement of "gambling and the lottery would also be illegal" seems to miss that in probably the vast majority of the US, gambling and operating lotteries is illegal. For example, Texas recently had to have a constitutional amendment to allow sports teams to hold charitable raffles. https://ballotpedia.org/Texas_Proposition_5,_Definition_of_Professional_Sports_Team_in_Charitable_Raffles_Amendment_(2017) https://ballotpedia.org/Texas_Proposition_5,_Definition_of_P...

ghaff 9y ago

That and a lot of people really aren't qualified to judge the risk and fall victim to "You can't lose!" scams. Being rich is no guarantee of financial sophistication of course but there's some correlation. And, as you say, they're less likely to be wiped out even if they lose their investment. I agree it's not a perfect system and people who want to can find other ways to throw away their money. But we're probably not guilty of over-regulating financial markets in general.

smokeyj 9y ago
> I agree it's not a perfect system I think it's a great system. But I also hate poor people and don't want them to have the same opportunities I have. Let them play the lottery instead right?
- ghaff 9y ago
  For me personally, state lotteries work great. They're a very regressive tax. I also don't like them much and appreciate that, at least in my state, advertising and promotion was largely phased out. [ADDED: In case anyone missed the sarcasm I'm not a huge fan of state lotteries because they target the people who can least afford them. That said, I realize many buyers would go the less regulated route if they didn't exist.]

wtfrmyinitials 9y ago

I don't need the government to protect me from myself. Adults should be able to make their own decisions

exogen 9y ago
Predatory companies love people like you. Now people have lost their homes and grandparents are being swindled out of their retirements – good thing the government allowed companies to do whatever they want! Corporations are awesome! It was pretty cool when the banks told people they were qualified for loans, knowing they shouldn't be, then used that to their advantage to steal those people's houses. Fuck the government, am I right???
- conanbatt 9y ago
  Predatory investors love people like you. They get higher returns and much better negotiation power because some people advocate to take down their competition!
  - exogen 9y ago
    Who's losing their life savings or ending up in financial ruin in this scenario? Also I've never even heard of a "predatory investor", I'm pretty sure you just made that up.
    - conanbatt 9y ago
      If you are an investor, accreditation rules eliminate 95+% of the population as competition for your investment. That means you will get higher returns and better negotiation terms. Even founders cant invest in their own bethren! Think about that. YC startup founders could get together, talk to each other, and NOT be able to invest in each other. Neither could employees that have access to internal financials. You could believe your company is doing great, but you cannot invest. You dont have the chance to compete for the resource with the investors that can. This also means less money goes into investment. Result: - Qualified investors get higher returns - Employees get lower wages because there is less capital invested - Founders get less money - Fewer startups are created In the name of protecting compulsive gamblers?

summer_steven 9y ago

The point of accredited investing is to lock the middle class out of the market. If the law was really about "protecting people", then gambling and the lottery would also be illegal. Also, why can't I sign a paper saying I accept the risk of investing? Why can't I become an accredited investor by passing a class? I can pass a series of classes to become an EMT and be trusted with peoples lives, but no classes are sufficient to educate me about investing in startups. When you look at how the accredited investor laws are structured, its clearly meant lock the middle class out of the market

vel0city 9y ago
FWIW, in most of the US gambling is illegal and lotteries are often regulated by the State.
- maxerickson 9y ago
  There's loads of casinos though: https://www.worldcasinodirectory.com/united-states/map https://www.worldcasinodirectory.com/united-states/map And aren't states mostly the beneficiaries of lotteries? Here the revenue is supposed to go to schools or something.
  - vel0city 9y ago
    That source is pretty questionable. I'm pretty familiar with Texas' gambling laws so I was surprised to see so many "casinos" in Texas. Upon further review, many of those points are improperly placed, with actual casinos being out of state but simply matching a partial address. I'd take that map with a massive grain of salt, as chances are a high percentage of points are probably wrong. Of the three casinos near DFW, two are out of state with the third being a horse racing track. The one outside Austin really exists in Indiana. It also shows cruise ships, which usually don't begin gambling until they're well offshore. I'm not going to deny there are many casinos (there are plenty) but the OP's statement of "gambling and the lottery would also be illegal" seems to miss that in probably the vast majority of the US, gambling and operating lotteries is illegal. For example, Texas recently had to have a constitutional amendment to allow sports teams to hold charitable raffles. https://ballotpedia.org/Texas_Proposition_5,_Definition_of_Professional_Sports_Team_in_Charitable_Raffles_Amendment_(2017) https://ballotpedia.org/Texas_Proposition_5,_Definition_of_P...