Subject: File No. S7-25-06
From: John w miller
Affiliation: CEO

January 27, 2007

My wife and I have an investment portfolio worth just under a million dollars. The CAGR of the portion I personally manage is just over 27%. As most of it is invested in offshore equities through ADRs etc. I will probably be asleep when the needle passes 1 million. Will I suddenly be a more sophisticated investor when I wake up the next morning? No. But the current rules will suddenly allow me to access an additional several thousand investment vehicles. The suggestion to move the goalposts to 2.5 million, inflation adjusted, means I will get to keep my "unsophisticated investor" cherry intact for several more years.

How much money someone has is not a measure of their financial sophistication or otherwise. Hedge funds have different risks than equities, ADRs, options and the host of other investment opportunities available unrestricted to me currently. Hedge funds have different risks and, more importantly, different opportunities. Better still, these opportunities are not necessarily correlated with the existing opportunities.

There are hedge funds that have less risk than some mutual funds and definitely some stocks or futures. For example I am forbidden from considering investing in a value-based hedge fund run bt T2 Partners. I can, however sink all of my money into Baidu, a chinese search engine company currently trading at a P/E of 127. I don't think my assessment of the relative risks of those two investments will change whether I wake up broke, with $1m or with $2.5m.

Restricting the investment options on the basis of net worth is unfair, pure and simple. If the bar were lowered from $1 million to $10,000 there would be outcry that the measure was anti-poor. That it excludes a far larger group makes it no less unfair.

I think that the restriction should be removed.