2 ms·

My biggest issue is that it seems so obvious that there's got to be something fundamentally flawed with the idea. At first I thought it might be illegal, but I'

My biggest issue is that it seems so obvious that there's got to be something fundamentally flawed with the idea. At first I thought it might be illegal, but I'm not seeing how that could be.

qhoxie 18y ago
Let us hope for my sake that it is not illegal :)
nostrademons 18y ago
I would definitely check with a lawyer before doing something like this. There're certain situations where you need to be an "accredited investor" (liquid net worth > $1M) to take money from the public. I know hedge funds are one of these; I think private companies are another. If a private company has more than a certain number of shareholders, they need to file disclosures as if they were a public company; this is why Google went public. These protections were put in place after the crash of 29, when a great many ordinary investors lost their money investing in companies that weren't much more than a piece of paper. Again, talk to a lawyer. This is one area you don't want to dick around in without good legal advice.
- run4yourlives 18y ago
  Good advice, but what about Kiva.org? Don't they essentially act in the same way? Granted, there is no real return offered.
  - nostrademons 18y ago
    I'm not a lawyer and hence not qualified to give legal advice. I can only speculate (always a dangerous thing)... I'm guessing that it has everything to do with a real return not being guaranteed. Same goes for Prosper.com and MicroPledge. Anyone can raise money for anything on the Internet: folks do whip-rounds via Paypal to buy friends a new laptop. But if you want the legal guarantees of stock ownership, etc, you need to file the appropriate disclosures. </not-legal-advice>
    - run4yourlives 18y ago
      Heh, this is pretty interesting: http://www.prosper.com/help/topics/lender-quiet_period.aspx http://www.prosper.com/help/topics/lender-quiet_period.aspx
  - cabalamat 18y ago
    You're right, lenders on Kiva aren't paid interest. Kiva's founders have said this is so they don't have to comply with burdensome investment legislation.
    - aasarava 18y ago
      Lenders to Kiva also aren't buying securities -- they're providing money to a microfinance institution which then distributes the money as promised, hopefully to return it later. Should the loan not be repaid, the lender has no rights to any assets.
- hollerith 18y ago
  There're certain situations where you need to be an "accredited investor" (liquid net worth > $1M) to take money from the public. I know hedge funds are one of these You need to be an accredited investor to put money into a hedge fund. Anyway, what the world really needs is not a new stock market but rather a new banking system.

My biggest issue is that it seems so obvious that there's got to be something fundamentally flawed with the idea. At first I thought it might be illegal, but I'm not seeing how that could be.

qhoxie 18y ago

Let us hope for my sake that it is not illegal :)

nostrademons 18y ago

I would definitely check with a lawyer before doing something like this. There're certain situations where you need to be an "accredited investor" (liquid net worth > $1M) to take money from the public. I know hedge funds are one of these; I think private companies are another. If a private company has more than a certain number of shareholders, they need to file disclosures as if they were a public company; this is why Google went public. These protections were put in place after the crash of 29, when a great many ordinary investors lost their money investing in companies that weren't much more than a piece of paper. Again, talk to a lawyer. This is one area you don't want to dick around in without good legal advice.

run4yourlives 18y ago
Good advice, but what about Kiva.org? Don't they essentially act in the same way? Granted, there is no real return offered.
- nostrademons 18y ago
  I'm not a lawyer and hence not qualified to give legal advice. I can only speculate (always a dangerous thing)... I'm guessing that it has everything to do with a real return not being guaranteed. Same goes for Prosper.com and MicroPledge. Anyone can raise money for anything on the Internet: folks do whip-rounds via Paypal to buy friends a new laptop. But if you want the legal guarantees of stock ownership, etc, you need to file the appropriate disclosures. </not-legal-advice>
  - run4yourlives 18y ago
    Heh, this is pretty interesting: http://www.prosper.com/help/topics/lender-quiet_period.aspx http://www.prosper.com/help/topics/lender-quiet_period.aspx
- cabalamat 18y ago
  You're right, lenders on Kiva aren't paid interest. Kiva's founders have said this is so they don't have to comply with burdensome investment legislation.
  - aasarava 18y ago
    Lenders to Kiva also aren't buying securities -- they're providing money to a microfinance institution which then distributes the money as promised, hopefully to return it later. Should the loan not be repaid, the lender has no rights to any assets.
hollerith 18y ago
There're certain situations where you need to be an "accredited investor" (liquid net worth > $1M) to take money from the public. I know hedge funds are one of these You need to be an accredited investor to put money into a hedge fund. Anyway, what the world really needs is not a new stock market but rather a new banking system.