December 19, 2019
Sirs and Madams of the SEC, I agree with the proposal to broaden the definition of Accredited Investor. An investor having a net worth or income in excess of an arbitrary number does not show that the investor has the ability to understand the investment. Nor does it show that they have the ability to withstand losses should the investments fail since not enough factors are taken into account. Someone meeting the income threshold because they live in a high cost of living area and wouldn’t meet the net worth threshold due to the high cost of living is allowed to invest but due to the high cost of living may not have a great buffer in case the investment would fail. How does that make them knowledgeable enough to make the investment? On the other side, if someone living in a lower cost of living market who would have the buffer to invest can’t because of not meeting the arbitrary number? The most important criteria should be that the investor understands the investment as well as the risks associated with it. Someone who has professional certification(s) is far more qualified to determine if the investment is right for them or not far better than someone who doesn’t understand the investment but has money looking to invest. From one of the articles I read regarding the proposal: “"The failure to update these thresholds may be less about providing American investors access to lucrative private markets, and more about providing private markets access to potentially vulnerable American investors," Allison Lee, a Democratic-appointed SEC commissioner told the Journal. "Once they cross the threshold, there are no limits on the amount that can be gambled and lost."” That sounds like the perfect reason to broaden the definition. If an investor who has professional certifications granted by the state in which they reside then they understand the investment as well as the risk and thus are not gambling when they make the investment they did the due diligence to invest in. Having an arbitrary net worth or income set at an national level does not mean that an individual investor understands an investment well enough to make it or not. I support the broadening of the definition to be an Accredited Investor. Thanks, Michael Seng