January 27, 2007
Dear Sir -
It is unclear why any rule change regarding the definition of total net worth is necessary.
Please explain the assumed investor profile you have in mind in terms of total net worth and investment sophistication.
Will this new rule change implementation benefit the general investing public in a way that the public is now not protected?
If yes, how will the changes be other than a proposal to exclude a class of potential willing investors. This concepts protects no one.
It merely implies that the smaller redefined class can assume any risk available. There is no protective element defined.
Traditional investments; stock equities, mutual funds, bonds, derivatives, etc.., all are risky and can include excessive fee structures. These traditional investments permit the general public to lose large amounts of
capital over market cycles. It is not widely advertised as to what preventative measures are in place to protect the general public from participating in non appropriate risky investments.
As an example of risky poor investment, the name Enron comes to mind, which was readily available to the general public.
The real question is how will a rule change applied to hedge fund investing mitigate the general publics investment risk over and above what is now available for traditional investments?
Until there is a clearly defined beneficial change in the rules for defining an accredited investor there is no requirement to change the rule.
The definition of an accredited investor should remain as it is, as one with a total net worth (including home and other assets) of one million dollars.