From: Steve Colton
Sent: January 27, 2007
Subject: File No. S7-25-06

To whom it may concern:

  1. Although my household no doubt would qualify (i.e. pass the means test) as "Accredited Investors" even under the new rules, I see no reason why other ways could not be opened to allow other investors the opportunity to show competence in other ways than means testing.

  2. Why should 95% (or maybe soon to be 99%!) of Americans, simply because they have less than $1,000,000 (or $2,500,000?), be precluded from the same choices available to the rich? Why do we assume those with less than $1,000,000 to be sophisticated enough to understand the risks in stocks (which have lost trillions of investor dollars), stock options (the vast majority of which expire worthless), futures (where 95 % of retail investors lose money), mutual funds (80% of which underperform the market), and a whole host of very high-risk investments, yet deem them to be incapable of understanding the risks in hedge funds?

  3. I support ideas put forth by John Mauldin about using regulatory options to allow hedge funds and private equity groups better access to less affluent investors. Over time I believe this this would level the playing field, provide better access to capital to startups and distressed corporate entities, lower fees charged by hedge funds, etc. and generally make for a healthier market for hedge funds in the U.S.

Thank you for your interst in my response,

Steve Colton
Santa Clara, CA