4 ms·

There's nothing wrong with someone pointing out that something is illegal, for example I don't have to be a lawyer to note that stealing a car would violate cri

There's nothing wrong with someone pointing out that something is illegal, for example I don't have to be a lawyer to note that stealing a car would violate criminal law. It's reasonable for the OP to note that if they were to invest in that deal, then someone must be breaking the law. Note also that what you call "self-certification" is just ... it's how things are for everyone? It's not like you can ask the SEC for a piece of paper documenting that you qualify. There are some professional licenses that automatically count, but if you made $210,000 in W-2 income last year there's no report submitted to a central registry of People Allowed To Make Risky Investments.

gjsman-1000 3y ago
Right. I am not a lawyer (writer here), but read this page (as called out in the article) about Rule 506(c). https://www.sec.gov/education/smallbusiness/exemptofferings/rule506c https://www.sec.gov/education/smallbusiness/exemptofferings/... The requirement they seem to follow is: "all purchasers in the offering are accredited investors and the issuer takes reasonable steps to verify purchasers’ accredited investor status" Purism argues that everyone must be an accredited investor; but they state they take no steps to verify anyone. They even say that it is impossible to comply with the law ("since there is no way for Purism to validate your accredited investor status"). Well, what is it then? Are they securities or not? If they aren't securities, why the accredited investor requirement? Are you instead going under Rule 504, which seems to prohibit anything publicly offered? If 504 doesn't work and you are ignoring a requirement for 506, is there some other section, or is it just (arguably) flat-out illegal? It doesn't take a lawyer to say that something's fishy. While the law is probably fuzzy on what that verification requires, Purism could at least just call people on the phone, and say, "hey, we need accredited investors, are you one? Do you fully understand what this means and what your obligations are?" And record the response for legal purposes.
- quesera 3y ago
  I've seen these "reasonable steps" devolve to requiring the purchaser to explicitly state that they qualify in a legal document (contract).
- glenngillen 3y ago
  I am not a lawyer, but I am apparently an "accredited investor". I have, multiple times, had to pay my accountant to generate a document where he attests that I meet the criteria to be considered an accredited investor so that I could invest in some startup. Easiest money my accountant ever makes. And the effort for the startup/founders is "sorry, we can't send you a term sheet until we get a certification of your accredited investor status from a licensed tax professional. We hope you understand". For Purism to claim it's impossible to do this is demonstrably bullshit.
fsckboy 3y ago
> it's reasonable for the OP to note that if they were to invest in that deal, then someone must be breaking the law. it would be much more reasonable for OP to note that they don't have a clue if anybody would be breaking the law Your teenaged kid takes your car without you knowing and kills somebody in a car accident. Drunk. On your alcohol. Did they steal it? What's your liability? Do you need to talk to a lawyer, or is it reasonable for OP to give you his opinion?
- jmillikin 3y ago
  > it would be much more reasonable for OP to note that they don't > have a clue if anybody would be breaking the law If someone who does not qualify as an Accredited Investor has invested into a security that is only allowed to be sold to people who qualify as Accredited Investors, then the law has clearly been broken by someone. You don't need to graduate from Yale to understand this. > Your teenaged kid takes your car without you knowing and kills somebody in > a car accident. Drunk. On your alcohol. Did they steal it? What's your > liability? Do you need to talk to a lawyer, or is it reasonable for OP to > give you his opinion? The OP's opinion would likely be like mine, or like any reasonable person's, which is that (1) an illegal thing has clearly happened, (2) your kid has clearly done at least one illegal thing, (3) you may also have done something illegal. What kind of person would look at the facts of that situation and think "hmm, I dunno, this law stuff is difficult, no way for me to know if I have any legal risk"?
  - fsckboy 3y ago
    > What kind of person would look at the facts of that situation and think "hmm, I dunno, this law stuff is difficult, no way for me to know if I have any legal risk"? the same kind of person who thinks that this company didn't consult their attorneys but is just winging it, so they decide to go on HN and just wing it, and they find good company here.

gjsman-1000 3y ago

Right. I am not a lawyer (writer here), but read this page (as called out in the article) about Rule 506(c). https://www.sec.gov/education/smallbusiness/exemptofferings/rule506c https://www.sec.gov/education/smallbusiness/exemptofferings/... The requirement they seem to follow is: "all purchasers in the offering are accredited investors and the issuer takes reasonable steps to verify purchasers’ accredited investor status" Purism argues that everyone must be an accredited investor; but they state they take no steps to verify anyone. They even say that it is impossible to comply with the law ("since there is no way for Purism to validate your accredited investor status"). Well, what is it then? Are they securities or not? If they aren't securities, why the accredited investor requirement? Are you instead going under Rule 504, which seems to prohibit anything publicly offered? If 504 doesn't work and you are ignoring a requirement for 506, is there some other section, or is it just (arguably) flat-out illegal? It doesn't take a lawyer to say that something's fishy. While the law is probably fuzzy on what that verification requires, Purism could at least just call people on the phone, and say, "hey, we need accredited investors, are you one? Do you fully understand what this means and what your obligations are?" And record the response for legal purposes.

quesera 3y ago
I've seen these "reasonable steps" devolve to requiring the purchaser to explicitly state that they qualify in a legal document (contract).
glenngillen 3y ago
I am not a lawyer, but I am apparently an "accredited investor". I have, multiple times, had to pay my accountant to generate a document where he attests that I meet the criteria to be considered an accredited investor so that I could invest in some startup. Easiest money my accountant ever makes. And the effort for the startup/founders is "sorry, we can't send you a term sheet until we get a certification of your accredited investor status from a licensed tax professional. We hope you understand". For Purism to claim it's impossible to do this is demonstrably bullshit.

fsckboy 3y ago

> it's reasonable for the OP to note that if they were to invest in that deal, then someone must be breaking the law. it would be much more reasonable for OP to note that they don't have a clue if anybody would be breaking the law Your teenaged kid takes your car without you knowing and kills somebody in a car accident. Drunk. On your alcohol. Did they steal it? What's your liability? Do you need to talk to a lawyer, or is it reasonable for OP to give you his opinion?

jmillikin 3y ago
> it would be much more reasonable for OP to note that they don't > have a clue if anybody would be breaking the law If someone who does not qualify as an Accredited Investor has invested into a security that is only allowed to be sold to people who qualify as Accredited Investors, then the law has clearly been broken by someone. You don't need to graduate from Yale to understand this. > Your teenaged kid takes your car without you knowing and kills somebody in > a car accident. Drunk. On your alcohol. Did they steal it? What's your > liability? Do you need to talk to a lawyer, or is it reasonable for OP to > give you his opinion? The OP's opinion would likely be like mine, or like any reasonable person's, which is that (1) an illegal thing has clearly happened, (2) your kid has clearly done at least one illegal thing, (3) you may also have done something illegal. What kind of person would look at the facts of that situation and think "hmm, I dunno, this law stuff is difficult, no way for me to know if I have any legal risk"?
- fsckboy 3y ago
  > What kind of person would look at the facts of that situation and think "hmm, I dunno, this law stuff is difficult, no way for me to know if I have any legal risk"? the same kind of person who thinks that this company didn't consult their attorneys but is just winging it, so they decide to go on HN and just wing it, and they find good company here.