4 ms·

The two big changes: 1. permitting natural persons who have "professional certifications" or "credentials issued by an accredited educational institution". 2.

The two big changes: 1. permitting natural persons who have "professional certifications" or "credentials issued by an accredited educational institution". 2. include as accredited investors, with respect to investments in a private fund, natural persons who are “knowledgeable employees” of the fund. Most of the other changes fill in gaps that shouldn't have existed: expanding the definition of spouse and adding orgs with >$5MM assets (including tribes, family offices, etc.). YC relevant: "demo days" will not constitute a general solicitation. Overall a welcome change. I assume that they'll use an existing set of professional certifications in finance, which tend to require non-trivial self-study, so it'll probably also create a market for short educational programs offered by accredited institutions.

bluedevil2k 6y ago
Do you think "credentials issued by an accredited educational institution" would include things like an MBA? Or even a BA in Business?
- SpicyLemonZest 6y ago
  The SEC's phrasing is somewhat misleading. The amendments give them the right to designate some kinds of educational credentials as sufficient, but they haven't actually done so; the only credentials designated right now are a handful of securities licenses.
- Lazare 6y ago
  In theory, the SEC could decide to count those. In practice, that's basically unthinkable.
  - gojomo 6y ago
    It's been discussed, so it's definitely thinkable. And if getting an accredited-institution MBA, for tuition payments of anywhere from $22K to $200K, after about 17 years of other education (K-12, undergrad) isn't enough for someone to protect their own wealth from scams, what's the point of all that credentialing, anyway?
    - zerkten 6y ago
      An MBA is not a licensure. There are overlaps between what an MBA and an accountant may have studied, but the CPA is what gives you a license. Lots of MBA students do not pursue financial courses beyond what is requires to pass. They may have interests in marketing, innovation, or other areas. They can be ill-equipped to deal with investments. The same pattern exists for law and many other professions. There are plenty of people with law degrees who fail, or decide to not pursue the bar exam.
      - gojomo 6y ago
        But an MBA who's a millionaire is competent to do any amount of private-investing? And an MBA who's not a millionaire isn't competent to do any private investing, even with just a small amount of their own money? Why should their net-worth be legally dispositive?
        tick_tock_tick 6y ago
        The millionaire can fuck up a few times and still be fine that's the real difference.
        gojomo 6y ago
        Only if they're wise enough to leave themself that wiggle room. It's a binary test, the 'accredited' can risk any amount. So why not let anyone take a proportionate risk?
    - nickpinkston 6y ago
      Fully agree - though I bet it doesn't help that much TBH.
    - elliekelly 6y ago
      Given the state of student loans in the US I think there could be a fairly compelling argument that an MBA is indicative of a person’s inability to protect their wealth. Not all MBAs are created equal. Most of them aren’t worth the price and the few that are worth it have a lot more to do with the network and connections than the education.
- otoburb 6y ago
  Some of the earlier proposals and discussions from public discourse included comments referring to credentials such as CPA, CFA, CMA, being a registered representative, MBA, CIMA, or possibly having been a broker, lawyer or accountant.[1][2] But ultimately we'll need to wait for the final list. [1] https://www.sec.gov/rules/concept/2019/33-10649.pdf https://www.sec.gov/rules/concept/2019/33-10649.pdf [2] https://www.sec.gov/rules/proposed/2019/33-10734.pdf https://www.sec.gov/rules/proposed/2019/33-10734.pdf
- edoceo 6y ago
  I foresee questionable institutions basically selling these creds to eager startup personality types
  - _jal 6y ago
    Of course, it happens any time you create magic status differentiators. As just one example, stories pop up every few years about sheriff's offices selling 'honorary deputy' or similar status to rich people. I guess sometimes people buy them as symbols, but more frequently for the concealed-carry rights.
Alex3917 6y ago
What's the definition of a "knowledgeable employee" of a fund? E.g. would any GP be assumed to qualify as long as the fund wasn't specifically created as a vehicle for them to qualify, or are there specific requirements?

bluedevil2k 6y ago

Do you think "credentials issued by an accredited educational institution" would include things like an MBA? Or even a BA in Business?

SpicyLemonZest 6y ago
The SEC's phrasing is somewhat misleading. The amendments give them the right to designate some kinds of educational credentials as sufficient, but they haven't actually done so; the only credentials designated right now are a handful of securities licenses.
Lazare 6y ago
In theory, the SEC could decide to count those. In practice, that's basically unthinkable.
- gojomo 6y ago
  It's been discussed, so it's definitely thinkable. And if getting an accredited-institution MBA, for tuition payments of anywhere from $22K to $200K, after about 17 years of other education (K-12, undergrad) isn't enough for someone to protect their own wealth from scams, what's the point of all that credentialing, anyway?
  - zerkten 6y ago
    An MBA is not a licensure. There are overlaps between what an MBA and an accountant may have studied, but the CPA is what gives you a license. Lots of MBA students do not pursue financial courses beyond what is requires to pass. They may have interests in marketing, innovation, or other areas. They can be ill-equipped to deal with investments. The same pattern exists for law and many other professions. There are plenty of people with law degrees who fail, or decide to not pursue the bar exam.
    - gojomo 6y ago
      But an MBA who's a millionaire is competent to do any amount of private-investing? And an MBA who's not a millionaire isn't competent to do any private investing, even with just a small amount of their own money? Why should their net-worth be legally dispositive?
      - tick_tock_tick 6y ago
        The millionaire can fuck up a few times and still be fine that's the real difference.
        gojomo 6y ago
        Only if they're wise enough to leave themself that wiggle room. It's a binary test, the 'accredited' can risk any amount. So why not let anyone take a proportionate risk?
  - nickpinkston 6y ago
    Fully agree - though I bet it doesn't help that much TBH.
  - elliekelly 6y ago
    Given the state of student loans in the US I think there could be a fairly compelling argument that an MBA is indicative of a person’s inability to protect their wealth. Not all MBAs are created equal. Most of them aren’t worth the price and the few that are worth it have a lot more to do with the network and connections than the education.
otoburb 6y ago
Some of the earlier proposals and discussions from public discourse included comments referring to credentials such as CPA, CFA, CMA, being a registered representative, MBA, CIMA, or possibly having been a broker, lawyer or accountant.[1][2] But ultimately we'll need to wait for the final list. [1] https://www.sec.gov/rules/concept/2019/33-10649.pdf https://www.sec.gov/rules/concept/2019/33-10649.pdf [2] https://www.sec.gov/rules/proposed/2019/33-10734.pdf https://www.sec.gov/rules/proposed/2019/33-10734.pdf
edoceo 6y ago
I foresee questionable institutions basically selling these creds to eager startup personality types
- _jal 6y ago
  Of course, it happens any time you create magic status differentiators. As just one example, stories pop up every few years about sheriff's offices selling 'honorary deputy' or similar status to rich people. I guess sometimes people buy them as symbols, but more frequently for the concealed-carry rights.

Alex3917 6y ago

What's the definition of a "knowledgeable employee" of a fund? E.g. would any GP be assumed to qualify as long as the fund wasn't specifically created as a vehicle for them to qualify, or are there specific requirements?