My comment, which I might blow up into a letter, is that the purpose of the accredited investor standard is to protect retail investors from a) scams, b) risks that retail is too unsophisticated to appreciate, c) excessive volatility in returns.
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The assets and income test fundamentally doesn't assess for sophistication (b), and some sensible guardrails for "If you've worked professionally in X capacity, we will consider you at least as competent as a dentist in assessing investment risks in X's business" would be better.
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Preventing outright scams is (and should be) in the SEC's other regulations, since we should care about scams targeting dentists no less than scams targeting e.g. schoolteachers, especially since dentists are a much more attractive target than schoolteachers (because they have $)
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It's not intrinsically obvious to me that decreasing volatility of returns should be in the government's interest or that the accredited investor standard is narrowly tailored to achieve it, given that retail investors have access to *very* volatile investments in public markets.
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Investors who seek volatility out of a desire to consume gambling are probably doing something which is against their interest, but they're a Robinhood account application away from e.g. making 100:1 bets on options which will expire worthless in less than a week.
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People invest in tech startups for all sorts of reasons, but one of them is the desire to 100X their money by causing something novel to exist in the world. Very, very few angel investments will succeed in doing this.
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But given that there is risk appetite in the world and that retail investors possess some of it, you should probably prefer them deploying their risk appetite against angel investments with a 5+ year time horizon versus weekly options on Tesla. First feels less like casino.
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In the UK the definition of a sophisticated investor takes into consideration if you have professional experience in PEX made multiple investments inunlisted companies before or are the director of a bigger company. https://www.handbook.fca.org.uk/handbook/COBS/4/12.html#DES583 …
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One can argue about the specifics but the general principle makes sense. Otherwise, if you only look at current assets & income of an investor you end up in a situation where only the rich can get richer.
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Would you say 1/20 or 1/30-1/50 investments generate a 100x + return? Overall the asset class breaks even loses, with the top earners getting multiples of their investment in ~5-10 years
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