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Wouldn't all these investors be considered accredited investors and thus be expected to make their own assessments and take their own risks?
by dv_dt 8y ago
Wouldn't all these investors be considered accredited investors and thus be expected to make their own assessments and take their own risks?
- s73v3r_ 8y agoIs "the company flat out lied to everyone" usually considered one of the risks you have to take?
- jacquesm 8y agoNo, but that is why you do due diligence.
- MR4D 8y agoRegardless of investor accreditation (AI, QC, or even QP), you still can't lie to investors. Other than minimum levels of wealth, it just establishes different reporting and structures for the investments (usually things like K-1s, non-traded vehicles, and little to no liquidity). Madoff is a great example of this - he took advantage of his investors by lying to them about results. He went to prison for securities fraud (I'm summarizing here), and the investors pursued various lawsuits to get their money back. In the Madoff case, JPMorgan was not only fined over a billion dollars [1], but also sued (and settled) for over 2 billion with defrauded shareholders [2]. This was basically for their knowing about the fraud and not informing shareholders (again, a legalistic simplification). [1] https://dealbook.nytimes.com/2014/01/07/jpmorgan-settles-with-federal-authorities-in-madoff-case/ https://dealbook.nytimes.com/2014/01/07/jpmorgan-settles-wit... [2] https://www.cnbc.com/2014/01/06/jpmorgan-to-pay-26-billion-to-settle-madoff-case.html https://www.cnbc.com/2014/01/06/jpmorgan-to-pay-26-billion-t...