Subject: File No. S7-07-12
From: Anonymous Anonymous

October 5, 2012

The State Corporation Commission (SCC) of the Commonwealth of Virginia posted comments saying that it wanted to express their concern with the SEC's proposed amendment of Rule 506 to allow general solicitation of accredited investors. They also said that they encourage the Commission to remove the ban on general soliciation in a way that "will minimize the harm to investors in the Commonwealth of Virginia". The SCC stated that "Rule 506 offerings have been a frequent and steady source of investor complaints to the SCC. During calendar years 2010 and 2011 enforcement actions were taken against 24 such offerings totaling $12,000,000 in investor losses."

The definition of investing is laying out money today in an effort to get more money back in the future. This is exactly what an investor does when they purchase lottery tickets They invest money in the tickets in the hopes of getting back significantly more money from the ticket. I should mention that Virginia solicits investors for its State-Sponsored lottery tickets through general solicitation and has no requirement for investors to be accredited. An investor is free to invest their entire paycheck in lottery tickets. The investor can take out a cash advance on their credit card and invest the borrowed money in the lottery tickets. There is no requirement for the investor to verify that their income or net worth exceeds a certain threshold. This would be discrimination and infringe on the investor's freedoms. Let's see how the $12 million of investor losses in Rule 506 offerings compares to the losses suffered by investors in Virginia's state-sponsored lottery In fiscal year 2011, Virginia's lottery profits totaled $444 million. From 1989 to June 2011, Virginia's lottery profits totaled nearly $8 billion. Given the costs incurred to operate the lottery, I would estimate that investor losses on Virginia's lottery greatly exceed $8 Billion Now this is certainly not the size of the Madoff scam, but it is still sizable and makes the $12 million of investor losses from Rule 506 offerings seem like chicken feed.

Investors should be free to invest their money as they see fit, without the government telling them where to put their money. While I applaud the efforts of Congress to allow general solicitation of private offerings, it does not go far enough, as it discriminates against investors who are not rich enough to meet the accredited investor standard. However, it is a start in the right direction and I encourage the SEC to immediately implement its proposal. However, the SEC should allow investors to self-certify that they are accredited investors, which is the only "reasonable" verification process that honors the intent of Congress and the President when they passed the JOBS Act.