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Also, there seems to be no personal accountability for those who lost all that money. I can set up a business that sells 10$ notes for 9$, convince a number of

by Udik 8y ago

Also, there seems to be no personal accountability for those who lost all that money. I can set up a business that sells 10$ notes for 9$, convince a number of VCs and/or shareholders to cover the losses, and live the sweet, exciting life of the entrepreneur until the game is over. By the time the value of the company drops to zero, I'll probably have accumulated enough cash to live comfortably ever after.

michaelt 8y ago
Why should anyone else be accountable for sophisticated investors' failure to do their due diligence? If I go to the Kentucky Derby put $1000 on Fancy Dancy Magic Prancy, it's hardly the horse's fault if my gamble doesn't pay off.
- marcosdumay 8y ago
  It's not the investor that decides to give money to the $10 bills seller. It's a third party. Now, I don't know what kind of punishment the GP wanted to see. If the question is why doesn't all the money run away from the VP's fund, I wonder about that too.
  - michaelt 8y ago
    Don't you have to be an accredited investor to invest in venture capital and angel investments?
- tristor 8y ago
  Your made up horse name made me just think of (which may already exist outside my awareness) a corollary to Poe's Law. "That without a clear indicator of the author's intent, it is impossible to create a parody of race horse names so obviously exaggerated that it cannot be mistaken by some readers for a sincere and accurate name of a horse." We could call it the "Derby Law". I actually searched for "Fancy Dancy Magic Prancy" because I thought that might be an actual horse. I found out it's a reference to PBF, but nonetheless it /could/ have been a real horse.
Radim 8y ago
And that's perfectly fine, as long as the people paying the price (here, VCs) are the ones bearing the responsibility for their eventual losses. It only gets disgusting when such "musical chairs" scams get too popular, becoming "too big to fail". Then the society at large will cover the bill, including those actors who were more prudent and honest throughout (adding insult to their injury). The more involved and indirect the chain of responsibility, the larger the potential for scams.

by Udik 8y ago

michaelt 8y ago

Why should anyone else be accountable for sophisticated investors' failure to do their due diligence? If I go to the Kentucky Derby put $1000 on Fancy Dancy Magic Prancy, it's hardly the horse's fault if my gamble doesn't pay off.

marcosdumay 8y ago
It's not the investor that decides to give money to the $10 bills seller. It's a third party. Now, I don't know what kind of punishment the GP wanted to see. If the question is why doesn't all the money run away from the VP's fund, I wonder about that too.
- michaelt 8y ago
  Don't you have to be an accredited investor to invest in venture capital and angel investments?
tristor 8y ago
Your made up horse name made me just think of (which may already exist outside my awareness) a corollary to Poe's Law. "That without a clear indicator of the author's intent, it is impossible to create a parody of race horse names so obviously exaggerated that it cannot be mistaken by some readers for a sincere and accurate name of a horse." We could call it the "Derby Law". I actually searched for "Fancy Dancy Magic Prancy" because I thought that might be an actual horse. I found out it's a reference to PBF, but nonetheless it /could/ have been a real horse.

Radim 8y ago

And that's perfectly fine, as long as the people paying the price (here, VCs) are the ones bearing the responsibility for their eventual losses. It only gets disgusting when such "musical chairs" scams get too popular, becoming "too big to fail". Then the society at large will cover the bill, including those actors who were more prudent and honest throughout (adding insult to their injury). The more involved and indirect the chain of responsibility, the larger the potential for scams.