[oh_sigh]

It's an interesting name they gave this concept. According to Wikipedia, "accreditation is the process in which certification of competency, authority, or credibility is presented"

But to be an accredited investor, all you need to do is have some money. There is no logical way that you can certify that a person's "competency, authority, or credibility" by merely knowing how much money is in their bank account.

[CyanLite2]

No but they would have the financial ability to withstanding speculative investment losses and (theoretically) have the financial means to hire lawyers and advisers to review investments before making them. Otherwise you'd have grade school teachers and firefighters individually risking their entire retirement on a Series A for their brother-in-law's "next sure thing" rather than their pension plan manager doing the due diligence.

[cortesoft]

They let people with enough money be accredited investors on the idea that if you have enough money you won't be devastated if you are a victim of fraud.

[oh_sigh]

I understand the reason - I'm saying the name is a joke.

[chiph]

I think the assumption is that even in the case of "trust fund babies" who inherited their wealth, they will have been exposed to enough info about finance to potentially understand the risks.

Neither the existing nor the upcoming changes will protect someone like a lottery winner. Unless they seek qualified advice in setting something like a family office up, in which case their intentions are good at least.