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SecondMarket's BitcoinTrust appears to still be limited to accredited investors, though. Wealth tests ought to be just as illegal as other forms of discriminat

by gojomo 13y ago

SecondMarket's BitcoinTrust appears to still be limited to accredited investors, though. Wealth tests ought to be just as illegal as other forms of discrimination.

jorgem 13y ago
>> Wealth tests Apparently, you can lie: http://www.quora.com/How-do-you-become-an-accredited-investor http://www.quora.com/How-do-you-become-an-accredited-investo...
- JumpCrisscross 13y ago
  That constitutes fraud. If the SEC found out the company would get fined and the individual potential fines, asset forfeitures, and even jail time.
  - oijaf888 13y ago
    Has any individual ever been charged with fraud for misrepresenting their wealth? I understand its likely that the company faces fines and such, but I've never heard of an individual getting in trouble.
  - gojomo 13y ago
    I doubt simply "finding out" would guarantee enforcement. They'd need time and an inclination to care, and tangible evidence. If there was no crime by the issuer other than being a little too trustworthy, it's unclear what the prioritization and penalties would be. I suspect the bigger risk is that the buyer – the not-really-'accredited' – has some dispute with the company and sues, causing problems because the various assumptions-of-competence (that come with 'accredited' status) are then voided. It gives a bad-faith or disgruntled investor more leverage over the issuer.
  - kevinpet 13y ago
    Well, the company could certainly be in hot water for selling to a non-accredited investor, but I've yet to see anyone who can point to a penalty that can be levied against the lying investor.
javert 13y ago
Clearly we shouldn't let middle class people fund budding enterprises. It is better to forcefully stop rational people from risking their money, in an attempt to protect irrational people from making irrational decisions. People who want to let the middle class take risks that could help them become wealthy are operating under the premise that this is supposed to be a free country---a premise that the country's elected and respected political leadership has wisely decided to adamantly ignore.
- drone 13y ago
  How can you make a rational decision when you have incomplete, or false information?
  - prutschman 13y ago
    Who are you to decide whether I have incomplete or false information?
    - drone 13y ago
      Prior to the securities Act of 1933, the measure of viability of a particular investment vehicle was on a state-by-state basis where they wouldn't allow investment vehicles that were unlikely to return a positive return to most investors (see Blue Sky Laws). The Act required all securities to be traded to be registered (in a nutshell), but allowed a loophole that effectively said "if the investor can afford to lose all of their investment, you don't need to go through the trouble of registering it, and you can rely on the investor to judge the value of the investment." Who am I? I have no intent to judge, however, as the act was prompted not by fantasy, but by watching many, many investors get sold on bad deals via poor information. In fact, the event which led to this was considered one of the greatest financial disasters in the history of America. So, you may be smart - and you may in fact be smarter than all of the swindlers who may try to take your money. I'd wager most who don't invest as a primary exercise aren't that smart (I only need to look back a couple of years), and I can't imagine how you'd propose to change a -means- test with an -abilities- test. Before you can invest in an oil well, should you be required to prove that you are above average in knowledge about the business of running oil wells?
drone 13y ago
It's a test that's defined by law [1], ostensibly to protect the non-wealthy from being scammed easily. [2] AFAIK, the intent is to prevent scammers from directly selling highly risky investments to the average Joe without explaining to them the complete depths of the risk. [1] http://www.sec.gov/answers/accred.htm http://www.sec.gov/answers/accred.htm [2] http://www.institutionalinvestorsalpha.com/Article/3214072/SEC-Commissioner-Walter-Says-Accredited-Investor-Standards-are-Too-Low.html http://www.institutionalinvestorsalpha.com/Article/3214072/S...
- fragsworth 13y ago
  Yeah, well, it also fucks over an intelligent but average-income Joe from being allowed to invest in deals that have as high of a return. For instance, I know right now that I'd like to invest a chunk of cash into several VR companies. I can't, though, because I'm not accredited. I have to wait for their IPOs, which will happen way after everyone already finds out how much it's all worth.
  - drone 13y ago
    What is the average rate of return for LPs in VC funds?
  - pfisch 13y ago
    The good of accredited investor laws far outweigh the bad. People who don't have a lot of money are much more likely to not have good money management skills than people who are able to hold on to lots of money for long time periods. Without accredited investor laws you would just pour tons and tons of dumb money into the system and the volume of scams would go way up. This is not to say there are not rich people being conned, but when that happens it often does not bankrupt them because they are less likely to go all in on a single asset. Something people with poor money management skills want to do all the time.
    - gojomo 13y ago
      True scams aren't much slowed by accredited investor laws. Scammers just move into the areas - gambling, real estate, amateur high-frequency-trading, under-the-table offerings - that escape SEC control. And people with poor money-management skills can already put all their money into legal things that go to zero - like lottery tickets or leveraged real-estate or Enron or pre-reorganization GM. And, 'dumb money' mainly gets smart by trial-and-error, and observing the lessons of peers. Locking all non-millionaires out of private investing prevents that process from even starting.

by gojomo 13y ago

SecondMarket's BitcoinTrust appears to still be limited to accredited investors, though. Wealth tests ought to be just as illegal as other forms of discrimination.

jorgem 13y ago

>> Wealth tests Apparently, you can lie: http://www.quora.com/How-do-you-become-an-accredited-investor http://www.quora.com/How-do-you-become-an-accredited-investo...

JumpCrisscross 13y ago
That constitutes fraud. If the SEC found out the company would get fined and the individual potential fines, asset forfeitures, and even jail time.
- oijaf888 13y ago
  Has any individual ever been charged with fraud for misrepresenting their wealth? I understand its likely that the company faces fines and such, but I've never heard of an individual getting in trouble.
- gojomo 13y ago
  I doubt simply "finding out" would guarantee enforcement. They'd need time and an inclination to care, and tangible evidence. If there was no crime by the issuer other than being a little too trustworthy, it's unclear what the prioritization and penalties would be. I suspect the bigger risk is that the buyer – the not-really-'accredited' – has some dispute with the company and sues, causing problems because the various assumptions-of-competence (that come with 'accredited' status) are then voided. It gives a bad-faith or disgruntled investor more leverage over the issuer.
- kevinpet 13y ago
  Well, the company could certainly be in hot water for selling to a non-accredited investor, but I've yet to see anyone who can point to a penalty that can be levied against the lying investor.

javert 13y ago

Clearly we shouldn't let middle class people fund budding enterprises. It is better to forcefully stop rational people from risking their money, in an attempt to protect irrational people from making irrational decisions. People who want to let the middle class take risks that could help them become wealthy are operating under the premise that this is supposed to be a free country---a premise that the country's elected and respected political leadership has wisely decided to adamantly ignore.

drone 13y ago
How can you make a rational decision when you have incomplete, or false information?
- prutschman 13y ago
  Who are you to decide whether I have incomplete or false information?
  - drone 13y ago
    Prior to the securities Act of 1933, the measure of viability of a particular investment vehicle was on a state-by-state basis where they wouldn't allow investment vehicles that were unlikely to return a positive return to most investors (see Blue Sky Laws). The Act required all securities to be traded to be registered (in a nutshell), but allowed a loophole that effectively said "if the investor can afford to lose all of their investment, you don't need to go through the trouble of registering it, and you can rely on the investor to judge the value of the investment." Who am I? I have no intent to judge, however, as the act was prompted not by fantasy, but by watching many, many investors get sold on bad deals via poor information. In fact, the event which led to this was considered one of the greatest financial disasters in the history of America. So, you may be smart - and you may in fact be smarter than all of the swindlers who may try to take your money. I'd wager most who don't invest as a primary exercise aren't that smart (I only need to look back a couple of years), and I can't imagine how you'd propose to change a -means- test with an -abilities- test. Before you can invest in an oil well, should you be required to prove that you are above average in knowledge about the business of running oil wells?

drone 13y ago

It's a test that's defined by law [1], ostensibly to protect the non-wealthy from being scammed easily. [2] AFAIK, the intent is to prevent scammers from directly selling highly risky investments to the average Joe without explaining to them the complete depths of the risk. [1] http://www.sec.gov/answers/accred.htm http://www.sec.gov/answers/accred.htm [2] http://www.institutionalinvestorsalpha.com/Article/3214072/SEC-Commissioner-Walter-Says-Accredited-Investor-Standards-are-Too-Low.html http://www.institutionalinvestorsalpha.com/Article/3214072/S...

fragsworth 13y ago
Yeah, well, it also fucks over an intelligent but average-income Joe from being allowed to invest in deals that have as high of a return. For instance, I know right now that I'd like to invest a chunk of cash into several VR companies. I can't, though, because I'm not accredited. I have to wait for their IPOs, which will happen way after everyone already finds out how much it's all worth.
- drone 13y ago
  What is the average rate of return for LPs in VC funds?
- pfisch 13y ago
  The good of accredited investor laws far outweigh the bad. People who don't have a lot of money are much more likely to not have good money management skills than people who are able to hold on to lots of money for long time periods. Without accredited investor laws you would just pour tons and tons of dumb money into the system and the volume of scams would go way up. This is not to say there are not rich people being conned, but when that happens it often does not bankrupt them because they are less likely to go all in on a single asset. Something people with poor money management skills want to do all the time.
  - gojomo 13y ago
    True scams aren't much slowed by accredited investor laws. Scammers just move into the areas - gambling, real estate, amateur high-frequency-trading, under-the-table offerings - that escape SEC control. And people with poor money-management skills can already put all their money into legal things that go to zero - like lottery tickets or leveraged real-estate or Enron or pre-reorganization GM. And, 'dumb money' mainly gets smart by trial-and-error, and observing the lessons of peers. Locking all non-millionaires out of private investing prevents that process from even starting.