March 8, 2020
Dear SEC --
It has never made sense to me that someone can bet their entire net worth on a penny stock with no regulatory oversight but that same person isn't allowed to invest in a company in their local community.
As you look to rework the definition of what it means to be an accredited investor, I propose that you expand the definition significantly. In my role as a business research librarian, I consistently work with companies who tap out their "friends and family" network when it comes to raising capital. This leaves those startups to turn to commercial lenders or those who already command a sizable share of wealth within the community. This tends to perpetuate a number of socio-economic ills.
As you look at various thresholds of what investors need to know prior to investing, I would suggest including some form of a "local" component. Yes, understanding risk is important. Yes, understanding the business model of the company being invested in is important. Yes, understanding the benefit of portfolio diversification is important. And at the same time, local community knowledge is also of value. The people that I know who want to do more local investing are interested in not only getting a return on their investment but in strengthening their local economy. Perhaps there could be a less stringent set of regulations if the investors' money is staying within a certain radius of their home residence?
Thanks for considering.
All the best,