[Travis]

But isn't it the responsibility of the sub-investors to do their own due diligence? After all, the entire purpose of accrediting investors is to get them to acknowledge that they are being given less protection from the SEC.

It's a process where the SEC asks the investor, "OK, you have a million dollars. Are you sure you know what you're doing?" And the individual says, "Yes, I'm willing to accept the additional risk that comes along with less oversight (ie. more flexibility)".

If an investor is putting money into the pot based on just the "Very Good Valuation" argument, and they've acknowledged the risks, they are not eligible for certain protections (because those protections also limit certain financial vehicles).

In a similar vein, I feel no sympathy for the majority of the people who gave their money to Bernie Madoff. I do, however, believe that there should be legal consequences for money managers who make those types of investments without proper due diligence.

[gchpaco]

How can you claim to have done due diligence investing in a company that is notoriously reticent about any and all financial details?

[Travis]

You try to acquire the relevant information and data. You ask your broker (GS, here), what the information is that they have, rather than just accepting their "Good Value" label. If that information doesn't meet your requirements for "due diligence", then you don't invest in that company.

Also, it's not particularly important to be able to claim due diligence.