5 ms·

What is an "accredited investor" anyway? And why does this index fund need to only be available to them?

freddie_mercury 8y ago
Let me Google that for you......
1ba9115454 8y ago
It's actually a thing. https://en.wikipedia.org/wiki/Accredited_investor https://en.wikipedia.org/wiki/Accredited_investor
JumpCrisscross 8y ago
> What is an "accredited investor" anyway? "Accredited investor" is defined in Rule 501 of Regulation D [1]. For natural persons, it means someone with more than $1 million in net worth (excluding one's primary residence) or $200,000 in annual income [2]. > why does this index fund need to only be available to them? reply Accredited investors can afford lawyers, to do diligence as well as enforce their claims. They are also better placed to lose money. This combination means people marketing securities exclusively to accredited investors have lower disclosure and other requirements than e.g. someone taking a company public. [1] https://www.sec.gov/fast-answers/answers-accredhtm.html https://www.sec.gov/fast-answers/answers-accredhtm.html [2] https://www.ecfr.gov/cgi-bin/retrieveECFR?gp=&SID=8edfd12967d69c024485029d968ee737&r=SECTION&n=17y3.0.1.1.12.0.46.176 https://www.ecfr.gov/cgi-bin/retrieveECFR?gp=&SID=8edfd12967... Disclaimer: I am not a lawyer. This is not legal advice. Talk to a lawyer if you are seriously considering this question.
- paulie_a 8y ago
  You absolutely never need to put that disclaimer on a forum post. You could outright claim to be a lawyer providing legal advice and there would be no worries.
  - root_axis 8y ago
    I don't think anyone believes its a legal issue, more one of intellectual honesty.
    - gamblor956 8y ago
      No, there are actually a number of people on this forum who believe they need to make that disclaimer because someone said so a decade ago. The disclaimer has absolutely no legal value, as what creates the attorney-client relationship isn't simply the offering of legal advice, but the offering of legal advice under the color of being in a position of legal authority to do so (i.e., claiming to be a lawyer). Just commenting on a forum post doesn't do that. But people saw a warning a decade ago and so they keep doing it.
      - paulie_a 8y ago
        Exactly, I could literally give terrible legal advice and outright claim to be a lawyer in a post and there would be zero repercussions. "I read it on the internet written by someone I don't know" is going to be a tough sell in court.
modeless 8y ago
Government regulations. The SEC defines an accredited investor as a millionaire, or someone with income > $200k. Millionaires have access to investment opportunities like this that are illegal to offer to non-millionaires. The logic is that millionaires are less likely to go broke because of a bad investment, but it does have a "rich get richer" effect.
- patio11 8y ago
  A slightly more optimistic take is that it's legal to offer this investment opportunity to non-millionaires. You have two choices: 1) Don't solicit publicly (i.e. don't make a business out of convincing non-affiliated retail investors to invest in Bitcoin; you can still band along with friends, family, and fools in a non-scalable fashion) 2) Do solicit publicly, but go through the disclosures-and-compliance process that society has decided should gate scalable access to retail investors' life savings The cryptocurrency economy is largely unwilling to do #2, which is onerous, expensive, and (ahem) exceedingly difficult to get through if you have produced nothing of economic substance.
  - modeless 8y ago
    No, it's not legal to offer this investment opportunity to non-millionaires, as the SEC has closed off your option #2. There have been several very serious efforts at regulatory compliance, involving big players in traditional finance, that have been rebuffed. Bitcoin index funds are not allowed to do public offerings right now, no matter how much compliance and disclosure they do. Not that I think it would be a great idea for anyone to sink their life savings into Bitcoin right now, but I think the SEC could do their job protecting investors without literally creating a 2-class system of rich privileged people and restricted poor people. For example, they could set limits on the percentage of your income or net worth you could invest in risky opportunities. That would allow people of all income levels to participate.
    - JumpCrisscross 8y ago
      > it's not legal to offer this investment opportunity to non-millionaires right now Bitcoin futures are legal. The principal issue ETF sponsors are running into is constructing an index. The SEC isn't thrilled with indices referencing trades on e.g. Bitfinex.
westpfelia 8y ago
Proect people who cant afford to lose everything.

Let me Google that for you......

It's actually a thing. https://en.wikipedia.org/wiki/Accredited_investor https://en.wikipedia.org/wiki/Accredited_investor

JumpCrisscross 8y ago

> What is an "accredited investor" anyway? "Accredited investor" is defined in Rule 501 of Regulation D [1]. For natural persons, it means someone with more than $1 million in net worth (excluding one's primary residence) or $200,000 in annual income [2]. > why does this index fund need to only be available to them? reply Accredited investors can afford lawyers, to do diligence as well as enforce their claims. They are also better placed to lose money. This combination means people marketing securities exclusively to accredited investors have lower disclosure and other requirements than e.g. someone taking a company public. [1] https://www.sec.gov/fast-answers/answers-accredhtm.html https://www.sec.gov/fast-answers/answers-accredhtm.html [2] https://www.ecfr.gov/cgi-bin/retrieveECFR?gp=&SID=8edfd12967d69c024485029d968ee737&r=SECTION&n=17y3.0.1.1.12.0.46.176 https://www.ecfr.gov/cgi-bin/retrieveECFR?gp=&SID=8edfd12967... Disclaimer: I am not a lawyer. This is not legal advice. Talk to a lawyer if you are seriously considering this question.

paulie_a 8y ago
You absolutely never need to put that disclaimer on a forum post. You could outright claim to be a lawyer providing legal advice and there would be no worries.
- root_axis 8y ago
  I don't think anyone believes its a legal issue, more one of intellectual honesty.
  - gamblor956 8y ago
    No, there are actually a number of people on this forum who believe they need to make that disclaimer because someone said so a decade ago. The disclaimer has absolutely no legal value, as what creates the attorney-client relationship isn't simply the offering of legal advice, but the offering of legal advice under the color of being in a position of legal authority to do so (i.e., claiming to be a lawyer). Just commenting on a forum post doesn't do that. But people saw a warning a decade ago and so they keep doing it.
    - paulie_a 8y ago
      Exactly, I could literally give terrible legal advice and outright claim to be a lawyer in a post and there would be zero repercussions. "I read it on the internet written by someone I don't know" is going to be a tough sell in court.

modeless 8y ago

Government regulations. The SEC defines an accredited investor as a millionaire, or someone with income > $200k. Millionaires have access to investment opportunities like this that are illegal to offer to non-millionaires. The logic is that millionaires are less likely to go broke because of a bad investment, but it does have a "rich get richer" effect.

patio11 8y ago
A slightly more optimistic take is that it's legal to offer this investment opportunity to non-millionaires. You have two choices: 1) Don't solicit publicly (i.e. don't make a business out of convincing non-affiliated retail investors to invest in Bitcoin; you can still band along with friends, family, and fools in a non-scalable fashion) 2) Do solicit publicly, but go through the disclosures-and-compliance process that society has decided should gate scalable access to retail investors' life savings The cryptocurrency economy is largely unwilling to do #2, which is onerous, expensive, and (ahem) exceedingly difficult to get through if you have produced nothing of economic substance.
- modeless 8y ago
  No, it's not legal to offer this investment opportunity to non-millionaires, as the SEC has closed off your option #2. There have been several very serious efforts at regulatory compliance, involving big players in traditional finance, that have been rebuffed. Bitcoin index funds are not allowed to do public offerings right now, no matter how much compliance and disclosure they do. Not that I think it would be a great idea for anyone to sink their life savings into Bitcoin right now, but I think the SEC could do their job protecting investors without literally creating a 2-class system of rich privileged people and restricted poor people. For example, they could set limits on the percentage of your income or net worth you could invest in risky opportunities. That would allow people of all income levels to participate.
  - JumpCrisscross 8y ago
    > it's not legal to offer this investment opportunity to non-millionaires right now Bitcoin futures are legal. The principal issue ETF sponsors are running into is constructing an index. The SEC isn't thrilled with indices referencing trades on e.g. Bitfinex.

westpfelia 8y ago

Proect people who cant afford to lose everything.