October 4, 2012
The comments posted by NASAA on what constitutes reasonable steps to verify that investors are accredited are completely unreasonable. NASAA cites a quote from Congresswoman Maxine Waters, which was obviously taken out of context, as evidenced by NASAA's failure to include the full quote. It essentially says that the self-certification process "leaves room for fraud". Fraud by who? The only fraud would be from investors lying about their accredited investor status. Should an issuer really be required to spend time and money in an effort to determine if an investor is lying about their net worth or income This is absurd NASAA goes on to recommend that an issuer should obtain copies of documents, such as tax returns, to verify an investors income. It also says that "verification of net worth is more challenging because an individual could provide proof of assets but not liabilities". NASAA goes on to say "the Commission should require the issuer to obtain a list of liabilities from the investor, which would include a sworn statement that all material liabilities are disclosed". Really? Again, NASAA wants to complicate the verification process and hender capital formation for small businesses and job growth for the U.S. economy all in an effort to "protect" people who are willing to lie about their net worth? Who are these people I guess they are the same people who think that a borrower who falsified income on a mortgage application in order to obtain a mortgage on an over-priced home should be "bailed out" when the value of their home declines instead of going to jail for mortgage fraud Requiring an investor to provide tax returns, balance sheets, and sworn statements that they have disclosed all liabilities is completely unreasonable and would make the new laws ordered by Congress and the President completely useless, because investors will not do it. They would view it as burdonsome and an invasion of privacy. It is obvious that NASAA is nothing more than a lobbying group for the mutual fund industry, although they operate under the guise of investor protection. I hope the SEC sees through this and realizes that nothing could be more reasonable than for an investor to self-certify that they are indeed accredited.