[tptacek]

Doesn't accreditation largely influence how securities are marketed? Isn't the liability issue with accreditation on the security seller, and not on the buyer? Why would we want more shady investments marketed to people, even if some what's marketed today turns out to be shady?

[mbesto]

As someone noted above, opening up accreditation to the whole population will do nothing to give those people access to the top performing investment vehicles, because the top performing investment vehicles are already getting their money from investors that they choose. So, all this will do is create more shady investment vehicles and those that can't afford to play with the bigger investments will continue to be sold on worse performing investment vehicles.

[aguyfromnb]

Bingo. Look at the fallout from the mortgage crisis/scandals. Buying a house is a straight forward investment. People were getting into mortgages without even understanding basic borrowing rates. In the end we (rightfully in most cases) blamed the brokers for pushing crap on people unknowingly. How is this going to work?

[travisoneill1]

This makes a lot of sense, but I don't support it because in this case the price of having less shady investment marketed to people is cutting off access to a large number of legit (though risky) investments.

[tptacek]

Lots of investments that have no business being marketed to retail investors are both (1) not reasonable or safe enough to be marketed and (2) believed in good faith by their marketers to be "legit".

So, two responses here:

First, when you think about the products that could be marketed without accreditation, you can't just think about the marginal cases where there is some plausible value; you have to think about all of them, bearing in mind that there is virtually no correspondence between how well something is marketed and how plausible it is an investment. See, for instance, the unregulated nutritional supplement market, which is is a hive of scum and villainy that kind of perfectly encapsulates this problem while being self-limited (in the non-pyramid-scheme case) to the amount of colloidal silver solution any person could reasonably purchase --- unlike an investment, which begs its purchaser to plow their life's savings into.

Second, contrary to the perspective you get on this issue by just looking at tiny startups, you have to consider that the entire securities industry is in a sense gated on accreditation, because the difference between a security that requires accreditation and one that doesn't is "keeping timely audited findings with the SEC". So for example: if you did away with accreditation, why would companies need to produce audited financials?

If your belief is that the edifice of securities regulation is entirely pointless and people should be able to buy any investment product they want and companies should be able to sell any investment product they want, that's a coherent take, but not one ("let's do away with companies having to file official statements") that most mainstream people would find persuasive.