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Modern scams don't show the 'accredited investor' rules are helpful. These "are you rich enough?" limits, on just a few classes of potential investments, did n

by gojomo 6y ago

Modern scams don't show the 'accredited investor' rules are helpful. These "are you rich enough?" limits, on just a few classes of potential investments, did not and can not provide any protection against rampant risks like: * Enron (an audited public company approved for widow-and-orphan investing) * Madoff * Fake-documentation or risk-oblivious home lending * At-home Forex or securities trading in arbitrarily exotic or leveraged ways (Robinhood! Futures! Expiring options!) * State lotteries with awful odds & deceptive advertising preying on the decision-biases of the poorly-educated * Prosperity gospel solicitations So rather than proving the value of Accredited Investor restrictions, your example scams (some crypto), and others, just show them to be an ineffectual symbolic Maginot Line, not a wise Chesterton's Fence.

chii 6y ago
the accredited investor rules are not meant to reduce all risks - just risks associated with non-disclosures. Things like enron cooking the books, or madoff ponzi schemes are going to happen regardless of the accredited investor certification. But what you can't know is whether having early stage startup and other investments require accredited investor certification means fewer people get trapped into investments they don't fully understand. I think it does.
- gojomo 6y ago
  What makes you "think" that? A hunch? Blind trust in ~90-year-old regulatory structures? How many people reviewed the Enron disclosures? How many amateur daytraders & Robinhood investors read all the disclosures of the "public" securities they hop into and out of? Aren't all levels of investors leveraging the greater attention of a smaller group of experts? Couldn't some non-millionaires – there are a lot of them, with many diverse skills! – be the kind of highly-attentive 'leads' who help vet firms for larger networks? Is an inherited-funds millionaire, no matter how dumb or lazy, more immune from the risks of non-disclosure than a young & ambitious non-millionaire? How about a non-millionaire with graduate degrees in business, finance, law? Why not test competence, not net worth? Would you also only allow the high-net-worth to do other risky activities, like drive private cars, play contact sports, camp on public lands, visit the beaches? How about raise children? There, a life is at stake. Do we dare let these gullible, barely-adult non-millionaires, the kind of rubes who would throw all their money away on unwise private investments if the SEC didn't save them, have children? And if slick founders can easily fleece these childlike non-millionaires through deceptive promises, what chance do these wisdom-constrained individuals have against slick politicians? Is it really prudent to let non-millionaires vote?

by gojomo 6y ago

chii 6y ago

the accredited investor rules are not meant to reduce all risks - just risks associated with non-disclosures. Things like enron cooking the books, or madoff ponzi schemes are going to happen regardless of the accredited investor certification. But what you can't know is whether having early stage startup and other investments require accredited investor certification means fewer people get trapped into investments they don't fully understand. I think it does.

gojomo 6y ago
What makes you "think" that? A hunch? Blind trust in ~90-year-old regulatory structures? How many people reviewed the Enron disclosures? How many amateur daytraders & Robinhood investors read all the disclosures of the "public" securities they hop into and out of? Aren't all levels of investors leveraging the greater attention of a smaller group of experts? Couldn't some non-millionaires – there are a lot of them, with many diverse skills! – be the kind of highly-attentive 'leads' who help vet firms for larger networks? Is an inherited-funds millionaire, no matter how dumb or lazy, more immune from the risks of non-disclosure than a young & ambitious non-millionaire? How about a non-millionaire with graduate degrees in business, finance, law? Why not test competence, not net worth? Would you also only allow the high-net-worth to do other risky activities, like drive private cars, play contact sports, camp on public lands, visit the beaches? How about raise children? There, a life is at stake. Do we dare let these gullible, barely-adult non-millionaires, the kind of rubes who would throw all their money away on unwise private investments if the SEC didn't save them, have children? And if slick founders can easily fleece these childlike non-millionaires through deceptive promises, what chance do these wisdom-constrained individuals have against slick politicians? Is it really prudent to let non-millionaires vote?