July 19, 2013
I am not an accredited investor as per the current definition, but I do not believe that means that I am unable to withstand the losses that may be incurred with a reasonably small investment in an unregistered security. In 2007 and 2008 I lost a significant amount of money invested in public companies these were registered companies that demonstrated their inability to maintain their value, never mind grow. Yes, despite my losses, I was able to buy food, cover my rent, and even continue to save to buy a house, replenishing some of what I lost. The idea that only rich people can survive a financial loss is outdated despite all the news from 2007 and 2009 millions of individuals lost money and yet were able to meet their financial obligations. This is proof that non-accredited individuals are able to deal with the consequences of risky investments as long as those investments are within reasonable limitations.
For crowd funding, the proposed rules would allow individuals to invest up to a certain percent of their annual income even if they are not accredited. I believe this allowance should be extended to include public solicitations of unregistered securities as long as I have a PPM and the ability to ask questions, I believe I have better information at my finger tips than with publicly traded companies. A PPM offers a single package of information which lets me know the business proposition, the use of funds, the risks, and the management team. I even get a basic financial model and projections. I could get this information from public companies but with a lot more work. If I am able to invest 10% of my income or savings into an unregistered offering, I believe I would end up making more informed decisions, though perhaps more risky, while still being able to cover the losses in case the company went south.
I believe the limitation for accredited investors to be too conservative the JOBS act has the potential to not only allow more companies to succeed but also to allow more individuals to invest and prosper rather than keeping the high return investments consolidated in the hands of the rich. I would like to recommend that companies be allowed to use public solicitations for unregistered securities to target non-accredited investors with a income or savings linked limit on their investment amount.