Subject: File No. S7-25-06
From: Sandra Carrico

January 27, 2007

Net worth is a poor proxy for determining investment appropratness. Since retirement responsibility now rests on the individual, government should provide maximum latitude to achive investment goals. Many of my peers carefully study modern portfolio theory and use various methods for diversification, insurance and hedging. A well choosen hedge fund could well be an excellent choice for adding a non-corrolated asset to a portfolio.

If any restriction should be imposed, it should be one of percentages. At the time of purchase, the aggregate of hedge funds or private offerings should comprise no more than 1/3 of the liquid net worth of the individual.

This is no harder to police than the total net worth requirement. From my experience, the individual does not provide (and should not be required to provide) documentation demonstrating net worth. Rather they are carefully interviewed by the person selling the product. During that interview, their assets are broadly listed and totaled.

Why not change the requirement to make sure in the interview that total amount invested in these types of funds does not comprise more than 1/3rd of assets?