From: Dan Taylor
I am commenting about the proposal to redefine the dollar value required of an individual investor to qualify as an "accredited investor".
First, I appreciate the Commission's concern for investors who assume risks they cannot or will not understand. An investor with limited assets who invests in a hedge fund can disproportionately risk more degradation to his financial situation that others who would qualify under a higher standard.
Secondly and however, the choice to make this decision should not arbitrarily be made by the Commission. An asset value standard ignores other factors. For example, the background and sophistication of the investor. I myself qualify under the existing rule but I will not qualify under the proposed change. My background: I am a retired registered representative who worked in securities industry for more than 30 years. In addition to being a broker, I was a leading "expert/consultant" in IRS regulations on IRAs and employer retirement plans, including fiduciary responsibility on participant-directed investments. I've earned several degrees, including one in accounting, and I have a CEBS from the Wharton School. I taught at many seminars and worked with numerous employer plans as well as lawyers and fellow accountants over my career. YET I WOULD NOT QUALIFY UNDER ANY PROPOSED CHANGE IN THE RULES.
Finally, the proposed change assumes I am stupid -- not smart enough -- to make an intelligent choice that would or could actually improve the asset allocation in my portfolio. This assumption is offensive to me as well as anyone else who might be classified as a "small" investor. The "small investor", no matter how he is defined, should have the same alternatives available as any accredited investor.
Yes, there should be safeguards against aggressive marketing or lack of disclosure and transparency. To use an analogy-- when eating a meal at the family table, there should be rules for table manners and discourse but everyone should have a right to sit at the table.
If there are other concerns, I think there is a case for not making any change to the asset rule or for strengthening the rules for background checks on potential investors.
Please be fair to investors but to ALL investors. Do not violate the financial civil rights of Americans.