January 27, 2007
I speak against the rule to increase the minimum net worth for an accredited investor. Thank you for this opportunity to share my thoughts.
This is clearly taking a bad rule and perpetuating it.
On its face, the rule will have no positive effect in improving accounting, fairness or opportunity to personal investors. It only raises the minimum net worth. The rule begs sarcasm as now NFL and NBA rookies (who did qualify)will not qualify along with the 90% of all economics professors and accountants.
There are unintended (or more likely unstated) effects that undermine our economy. It will protect certain US investment companies from competition. It will allow for London, Tokyo and other bases of economic innovation to thrive at our future expense.
The original legislation and new rule also perpetuate the mistaken notion that "accredited" protects the consumer from fraud. Unless punished, fraud will thrive. Legislation and enforcement need to focus more on fraudulent behaviors and punish bad actors with more than a fraction of their ill gotten gains, a year vacation fromthe business and "no admission of guilt" settlements.
Finally, I do think the SEC needs to increase its vigilance and energies. Sarbanes Oxley has been a travesty and waste. Worse, it perpetuates a false sense of security that the US is improving the fairness and transparency of its commerce. The SEC did not detect (and belatedly only appears to enforce) laws protecting investors, managed care customers and patients. The latter who were overcharged and cheated from treatment by UnitedHealth's secretly diverting billions to its executives (I use the last word loosely). After the fact, this fraud at hundreds of other US companies is finally being brought to light.