[toomuchtodo]

Because the public are not accredited/sophisticated investors. It's to prevent them from being swindled.

How much did professional investors lose on Theranos alone (answer: Somewhere between $600-$800 million)?

[bduerst]

That's a different definition of 'general public'.

Most of the public you're referring to are not pouring their savings into these IPOs.

Even so, the SEC shouldn't require companies to be profitable in order to be publicly traded - could you imagine if we took every non-profitable company private because the public needed to be protected?

[madengr]

Recently looked up "accredited investor". Joint income of > $300k and net worth (minus house) of > $ 1M.

I wonder if someone actually does the accrediting.

[icedchai]

It's actually > $300k income or > $1M net worth. And, no, nobody does the accrediting. It's basically an honor system.

[eganist]

>300k income joint, >200k income single, or >1m excl. primary residence in any event.

Paraphrasing an attorney from years ago: The risk of lying to invest in something only open to accredited investors is colossal both to the entity raising funds as well as to the investor, and it can/does get caught during diligence, so it's not so much an honor system as it is something that inevitably gets audited/managed either down the road or especially when something goes wrong.

This may have changed and my recollection may not be accurate. Lastly, this isn't legal advice given that I'm not a lawyer.