Subject: File No. S7-06-13
From: Bruce Leban
Affiliation: unknown

August 26, 2013

It is my understanding that the SEC is desiring to shift from self-certification of qualified investors to requiring companies to verify the qualifications. Furthermore, I understand that the SEC wants the verification to be repeated every 3 months.

On the first point, is there any evidence that self-certification has been inadequate? Requiring companies to verify the qualifications of their investors is an onerous requirement for small businesses who might receive investments from "friends and family" and "angel investors" in amounts as small as a few thousand dollars. These investors might well balk at the privacy invasion represented by the verification process. Furthermore, spending a considerable amount of money on lawyers and accountants to verify each investor reduces the amount of money available to the company to execute its business plan.

I believe that all that is necessary is that each investor sign an affidavit, under penalty of perjury, that they meet the requirements and that the company sign an affidavit, under penalty of perjury, that they have received such affidavits from all investors and they have no reason to believe that any of them are untrue. Surely the penalties of perjury plus the potential lost of an investment should be enough to dissuade anyone from investing when they do not meet the requirements. And if not, a new verification requirement would not make a difference. Investors that would lie when self-certifying under penalty of perjury, could just as easily lie during verification. Bank statements are easy to fake if you want to.

On the second point, re-verifying investors is pointless. Once an investment has been made, that investor is not going to be able to "withdraw" their investment at will. If they no longer qualify, that is irrelevant.