February 24, 2007
Instead of raising the requirements to be considered an accredited investor, please consider instead the elimination of a requirement based upon net worth.
Please remember that you don't have to be rich to understand the risks and opportunities of hedge funds and private offerings. Some people obtain financial independence and qualify as accredited investors without regard to their financial savvy by some stroke of good fortune. At the same time there are many educated people (MBAs, doctors, military officers, accountants, and lawyers) who do not meet this net worth requirement and are unfairly excluded.
While the rule is clearly meant to protect investors, the US constitution asserts equality for individuals, regardless of net worth. No one keeps me from choosing my destiny in many other financial matters, even when the odds are clearly against me (ie – gambling and lotteries). I could have easily invested in the likes of Enron or Worldcom and lost everything as those companies imploded. Investing in the market simply opens oneself to risks, regardless of the vehicle chosen. Discriminating against smaller net worth investors does not reduce their risks.
In fact, the proposed requirement arbitrarily restricts investment choices and vehicles from smaller investors. By limiting these choices, the SEC limits one's ability to diversify funds. In effect, this rule actually increases risk to smaller investors by eliminating their ability to utilize certain funds that may meet their investment objectives. These funds should be available for all to use to diversify their holdings, not just the super wealthy.
Please do not limit opportunities for smaller investors. I urge the SEC to look for alternate ways to accredit persons that do not rely upon one's financial status.
Thank you for your time,