From: Steven Stoller
Sent: January 26, 2007
Subject: File No. S7-25-06

I am concerned about the Securities and Exchange Commission proposed increase of net worth threshold for hedge fund investors. While I applaud the SEC's efforts to protect “unsophisticated investors”, doing so by raising the net worth threshold makes little sense to me.

This is not a rich man's problem, as it takes away an excellent investment vehicle for over 7 million American households. According to today's Wall Street Journal, raising the net worth requirement from $1 Million to $2.5 Million reduces the number of households eligible for this kind of investment by over 80%-- from 8.5% of households to 1.3% of households.

It makes no sense to protect Americans from free choice. I risked my life savings by opening a restaurant in Atlanta. Since most small businesses fail, especially restaurants, you can use the same logic to limit small business formation, the engine that continues to create a majority of the United State's jobs and wealth especially in Georgia.

Further, I can expose myself to investment risk by lending money to by brother-in-law, or in the internet age, can risk my life savings in the stock market with the click of a button by betting on stock whose name was spammed to me by a boiler room operation.

Singling out hedge funds and related investment partnerships for special treatment makes no sense. It is much too broad a brush to use. Warren Buffett's Berkshire Hathaway, for example, has been called the safest investment next to U.S. Treasury Bonds, but under this type of regulation his original investors would have perhaps been prohibited from investing in his partnership in 1958 —one that allowed them to each become wealthy by partnering with the one of the countries most successful and ethical allocators of capital.

If I were to form an investment partnership today, something I actually hope to do, this regulation would eliminate almost all my potential partners, taking away their chance to make an investment choice—no matter how safe.

Certainly there is a role for the SEC to monitor hedge funds and investment partnerships, but I believe that just raising an investment minimum does not really accomplish anything at all. Strict enforcement of laws would do more to protect our citizens by going after the bad apples in the barrel.
However, raising the investment threshold does nothing but take away a great investment alternative for millions of Americans.

Thank You,

Steven Stoller