April 10, 2007
I disagree with the proposal to increase the minimum net worth for investing in hedge funds to $2,500,000. It is arrogant to think that just because a person doesn't have a lot of money that they are incapable of understanding the risks associated with any investment.
By having ANY minimum net worth requirement, you have in effect told millions of college-educated people with degrees in finance (including myself), engineers, CPAs and other professionals that they are not smart enough to invest, which is the height of elitism. The job of the SEC is ensure that the managers of the funds are running their business honestly and with full disclosure of their operations, and not to decide who is smart enough to select that investment.
Sometimes people lose money in businesses, in lotteries, or investing in the NASDAQ, which is still down over 50%, but that is what happens in a market economy. It is not the SEC's job to protect people from themselves.
By limiting investment options to those that already have significant financial advantages, many of which simply inherited their money, then you will have created a two-class society in our country. Maybe that's what you want, but it's not what our country is about.
Please remove ALL minimum net worth requirements for hedge fund investing, but enforce strict disclosure requirements for those funds that open their offerings to the general public.