June 2, 2011
Subject: Public Notice 2011-109
Please don't change this rule. Please don't raise the limit from $1.5M to $2.0M. It will hurt the small hedge funds like mine much more than it will the large multi-billion dollar ones.
My firm already has to turn down many small investors who really want to invest in our fund and are very financially sophisticated but are otherwise excluded by the current $1.5M rule. Increasing this to $2M and especially excluding the value of the person's primary residence would make this problem worse.
This rule change will likely put my hedge fund and many other small hedge funds out of business. This would reduce competition and thus benefit the large hedge funds at the expense of small investors and small hedge funds.
If an investor is financially literate and sophisticated they should have the opportunity and right to invest in a hedge fund. This potential rule change would limit the potential benefits of investing in hedge funds to the ultra rich and is not fair.
Please take a survey of actual investors to see what they want before you make this change. I am confident you will find they want to have the option to invest in hedge funds and not have this opportunity taken away from them just because they happen to have only $1.5M in net worth and fall below a new proposed $2M threshold. Please don't take this opportunity away from many currently eligible people by raising the limit form $1.5M to $2.0M. Please allow them to make the choice on their own.
I urge the Commission to not to raise the thresholds as proposed in the notice. Please keep the rule as is. This would be best for individual investors and small hedge funds.
But, if you do decide to raise the threshold to $2M, despite my plea, then please do not exclude person's primary residence from the determination of whether a person meets the net worth standard.
Also, if you do raise the thresholds, please allow existing investors to be grandfathered i.e. to not be subject to the new rule
Again, I urge the Commission to not to raise the thresholds as proposed in the notice. Please keep the rule as is.
Thank you for considering my comments.
Thornton Capital Management LLC