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comment by nil
nil  ·  10 days ago  ·  link  ·    ·  parent  ·  post: The SEC Modernizes the Accredited Investor Definition

I smell tax evasion.





kleinbl00  ·  10 days ago  ·  link  ·  

More like irrational exuberance. The "accredited investor" phrase is used when dealing with risky assets under scant oversight. The "you must be this rich to play" threshold is so that you can be assumed to have generated enough wealth to be cautious about blowing yourself up, so they take off the guide rails.

This will basically allow any dumb-ass fund to sell any dumb-ass thing to any dumbass out there and when they get blown up, the dumb-ass fund will be able to say "they were an accredited investor, they knew the risks" and pocket the vig.

nil  ·  9 days ago  ·  link  ·  

I read a few articles suggesting that the old definition was archaic and unfair. "Why are we assuming that only rich people have credibility?","What about Bernie Madoff?", etc. But that doesn't tell the full story. Rich people do have more to lose. If I have $1,000,000 in the bank and roll up trying to rent an apartment, the landlord is going to immediately assume things about me - that I'm smart, that I have my shit together, that I'm not going to cause problems. It doesn't matter if I am a deviant asshole deep down. Sad, but that's the world we live in.

The same thing applies to people creating funds. Predatory people with less credibility absolutely will take advantage of this.

Tax evasion was the wrong comment and I apologize.

mk  ·  10 days ago  ·  link  ·  

No. It's been an egregious you-must-be-this-rich-to-play model. Now it seems closer to a literacy test. Progress?