Subject: File No. S7-09-13
From: Anonymous Anonymous

February 7, 2014

I have noticed a few comment letters that advocate for taking the "lesser of" income or net worth individual investment limit in exchange for reduced disclosure. While sensible on first glance, such a proposal is problematic with the types of investors that would be most interested in crowdfunding investments.

Take for example, the recent college graduate, with debt, who is now working full time at a yearly salary above the national median. That individual likely has disposable income, even with student loan payments. However, a "lesser of" position would prevent that individual from investing because his or her net worth is likely negative due to the presence of student loan debt.

Studies show that younger investors will be the ones most attracted to securities crowdfunding. It also stands to reason that younger investors are most suited to securities crowdfunding because of the longer time horizon for a return on the investment.

Here lies the challenge for the SEC, is there an acceptable means to better limit the amount of risk individual investors take on in exchange for reducing issuer disclosure? "Lesser of" certainly doesn't work. "Greater of" in the proposed rule has received some negative attention. Any sort of calculation in-between would be too difficult to implement or enforce.

My instinct is to leave the standard as "greater of" with improved affirmations by investors. Rather than just a checkbox that signals acceptance of investment risk, the investors could be required to type out, "I understand that the money I invest is at risk and it is probably that my investment will become worthless. I have not excesses my investment limit...", or something to that effect. Psychologically, this could better bring home the risk the investor is taking on by making the investment.