February 24, 2007
As a private individual investor since 1975 when I started college, I am writing to comment on S7-25-06, specifically section III(A) which proposes to raise the accredited investor net worth from 1 million to 2.5 million. I qualify as an accredited investor today but would not yet qualify under the proposed change. This only puts a valuable category of investments further out of reach of myself and other knowledgeable investors.
The premise that only investors with $2.5 million are knowledgeable enough to understand the risks is completely false. There are active investors with $1000 who can understand the risk and there are investors with $3 million who rely on financial advisors and are themselves completely clueless.
I agree that home values and such have increased the number of eligible but unsophisticated investors but I completely disagree with raising the limit for the preceding reason. If nothing else, you could keep the current limits and simply exclude home values as counting toward the accredited investor net worth.
Instead, I urge you to concentrate on making these investments safer by requiring fuller disclosures and accountability and then lower the limits to make them available to more people.
Thank you for your consideration,
Clint O'Connor