January 27, 2007
The minimum requirements should not be raised. To do so would worsen a system that unjustly discriminates against those who have sufficient investing sophistication to properly evaluate the risks of investing in hedge funds, but who have not yet achieved a certain level of wealth.
Net worth is a poor substitute for gaging investing sophistication: there are surely plenty of feeble-minded (but rich) investors putting money into hedge funds, while educated, sharp-minded, young investors (who don't have a million dollars) are denied the opportunity.
The minimum net worth requirements should, if anything, be rolled back, not increased. The SEC should feel uneasy in enforcing the current regulations, and should feel shame in considering the proposed changes.