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> To qualify for the tender offer, participants must have at least 10,000 Uber shares and be “accredited investors,” an SEC designation (pdf) for wealthy indivi

by mabbo 9y ago

> To qualify for the tender offer, participants must have at least 10,000 Uber shares and be “accredited investors,” an SEC designation (pdf) for wealthy individuals. From the SEC link: > An accredited investor, in the context of a natural person, includes anyone who: > earned income that exceeded $200,000 (or $300,000 together with a spouse) in each of the prior two years, and reasonably expects the same for the current year, OR > has a net worth over $1 million, either alone or together with a spouse (excluding the value of the person’s primary residence) Wow. There are actually laws in place that say the rich are able to do things that poor people can't. If you're a former Uber employee who moved somewhere with lower incomes and cost of living, you probably no longer meet the criteria needed to sell these stocks.

sokoloff 9y ago
While it's obviously true what the effect of the law is, I find it a more good than bad law. It's intended to protect non-accredited investors from flim-flam investment schemes, by making it a federal crime to solicit money from them. Soliciting money from accredited investors has a certain supposition that they are at least one (if not both) of better able to withstand a loss of principal in an investment and better able to protect themselves from investment scams. Though the article says otherwise, I don't believe one has to be an accredited investor to liquidate any position, only to initiate one. (I suppose there's an argument that you could swindled on the sale as well, but I find that a lot less compelling than on the buy.)
gamblor956 9y ago
Wow. There are actually laws in place that say the rich are able to do things that poor people can't. This has been discussed many times on HN. The purpose of the law isn't to prevent "poor people" from doing anything. The purpose of the law is to prevent companies from making unregistered sales of stock to people who aren't (1) saavy enough to evaluate the risks of their investment or (2) wealthy enough to survive a financial loss if the investment does not bear fruit. In a nutshell, the law requires companies wishing to sell to the general public to register with the SEC and meet certain financial disclosure requirements, such as disclosing financials using standardized accounting practices, so that the people buying their stock can judge the financial condition of the company they're investing in. Startups choose not to register or adhere to these disclosure requirements so they can peddle their BS financial "metrics" to investors using magical unicorn fairy dust bookkeeping. But to address the direct issue: there are few, if any, Uber stockholders who hold 10,000 shares of the company but would somehow not qualify as an accredited investor. The tender offer isn't intended for small stockholders with de minimis ownership, it's intended for stockholders with enough stock to represent significant fractions of the ownership of Uber.
- ryandrake 9y ago
  > This has been discussed many times on HN. The purpose of the law isn't to prevent "poor people" from doing anything. The purpose of the law is to prevent companies from making unregistered sales of stock to people who aren't (1) saavy enough to evaluate the risks of their investment or (2) wealthy enough to survive a financial loss if the investment does not bear fruit. This is all true, however laws should be judged by their effect, not by their purpose. This law effectively allows rich people to do things that poor people can't. It also may protect un-saavy investors, although I would argue that an un-saavy investor will inevitably find some other way to lose their money regardless of the accredited investor law. They're probably buying bitcoins right now or something.
  - gamblor956 9y ago
    This law effectively allows rich people to do things that poor people can't. You're still not getting it. The law does not stop poor people from investing in a private company. It simply prevents the company from advertising its stock to "poor people" unless the company registers with the SEC and demonstrates at least a minimal level of financial controls. A company can sell its stock to poor people as long as it does not solicit them. This is why employees and friends/family can buy stock of private companies. I will repeat again for emphasis: there is no law that prevents "poor people" from buying private company stock.
    - deleted 9y ago
      [deleted]
    - kodablah 9y ago
      Would you say the law disincentivizes private companies from allowing their stock to be bought/sold by "poor people"?
    - rrix2 9y ago
      The only entity buying stock here is Softbank (AFAIK), who is definitely not a "poor person". Outside of the handful of companies who have previously invested in the company (who are surely accredited), most entities who would qualify for this tender would be individual early employees. The accreditation requirement is also being held to those individual stock holders and option holders at the company who want to tender a sale of them to Softbank. Many are random engineers on this forum and other early-ish employees. Many may not meet the requirements for SEC accreditation, rules which specifically delineate around the wealth of the entity.

by mabbo 9y ago

sokoloff 9y ago

While it's obviously true what the effect of the law is, I find it a more good than bad law. It's intended to protect non-accredited investors from flim-flam investment schemes, by making it a federal crime to solicit money from them. Soliciting money from accredited investors has a certain supposition that they are at least one (if not both) of better able to withstand a loss of principal in an investment and better able to protect themselves from investment scams. Though the article says otherwise, I don't believe one has to be an accredited investor to liquidate any position, only to initiate one. (I suppose there's an argument that you could swindled on the sale as well, but I find that a lot less compelling than on the buy.)

gamblor956 9y ago

Wow. There are actually laws in place that say the rich are able to do things that poor people can't. This has been discussed many times on HN. The purpose of the law isn't to prevent "poor people" from doing anything. The purpose of the law is to prevent companies from making unregistered sales of stock to people who aren't (1) saavy enough to evaluate the risks of their investment or (2) wealthy enough to survive a financial loss if the investment does not bear fruit. In a nutshell, the law requires companies wishing to sell to the general public to register with the SEC and meet certain financial disclosure requirements, such as disclosing financials using standardized accounting practices, so that the people buying their stock can judge the financial condition of the company they're investing in. Startups choose not to register or adhere to these disclosure requirements so they can peddle their BS financial "metrics" to investors using magical unicorn fairy dust bookkeeping. But to address the direct issue: there are few, if any, Uber stockholders who hold 10,000 shares of the company but would somehow not qualify as an accredited investor. The tender offer isn't intended for small stockholders with de minimis ownership, it's intended for stockholders with enough stock to represent significant fractions of the ownership of Uber.

ryandrake 9y ago
> This has been discussed many times on HN. The purpose of the law isn't to prevent "poor people" from doing anything. The purpose of the law is to prevent companies from making unregistered sales of stock to people who aren't (1) saavy enough to evaluate the risks of their investment or (2) wealthy enough to survive a financial loss if the investment does not bear fruit. This is all true, however laws should be judged by their effect, not by their purpose. This law effectively allows rich people to do things that poor people can't. It also may protect un-saavy investors, although I would argue that an un-saavy investor will inevitably find some other way to lose their money regardless of the accredited investor law. They're probably buying bitcoins right now or something.
- gamblor956 9y ago
  This law effectively allows rich people to do things that poor people can't. You're still not getting it. The law does not stop poor people from investing in a private company. It simply prevents the company from advertising its stock to "poor people" unless the company registers with the SEC and demonstrates at least a minimal level of financial controls. A company can sell its stock to poor people as long as it does not solicit them. This is why employees and friends/family can buy stock of private companies. I will repeat again for emphasis: there is no law that prevents "poor people" from buying private company stock.
  - deleted 9y ago
    [deleted]
  - kodablah 9y ago
    Would you say the law disincentivizes private companies from allowing their stock to be bought/sold by "poor people"?
  - rrix2 9y ago
    The only entity buying stock here is Softbank (AFAIK), who is definitely not a "poor person". Outside of the handful of companies who have previously invested in the company (who are surely accredited), most entities who would qualify for this tender would be individual early employees. The accreditation requirement is also being held to those individual stock holders and option holders at the company who want to tender a sale of them to Softbank. Many are random engineers on this forum and other early-ish employees. Many may not meet the requirements for SEC accreditation, rules which specifically delineate around the wealth of the entity.