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by WillyBoy
5243 days ago
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Understanding the risks and ignoring the risks are two entirely different things... The current law basically says that anyone without $1 million and $200k in the bank is too stupid to invest in a startup but someone with that money is smart enough to. If they don't have to make those disclosures to people with lots of money now, why should they have to make them if they're crowdfunded (where people actually stand to lose less because the risk is spread over a larger pool)? I could see an argument for making those disclosures even with the system as it is now, but that argument is something entirely separate from the crowdfunding argument. Edit: It seems I missed your "can of worms" comment. I guess I just really don't like the fact that the US govt has and is continuing to treat its citizens like they're mentally incapacitated. Now a lot of us do behave that way, but I don't think it's the government's place to try to change that behavior. The market will do that when they lose their money. If they don't learn their lesson, that's their own problem. |
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True, but I'm actually less worried about the danger to individual retail investors, and more worried about the externalities to the system imposed by a mass influx of speculative crowdfunding -- externalities that can easily wipe out the retail investors, even if their losses aren't concentrated too heavily in any one company.
"The current law basically says that anyone without $1 million and $200k in the bank is too stupid to invest in a startup but someone with that money is smart enough to."
There are two ways to look at the meaning of the current law. The first is that yes, the law views net worth as a proxy for sophistication, and therefore those without high net worth are deemed "too stupid" to invest in private companies. The second interpretation is that those with net worth in excess of $1 million (or whichever benchmark we choose) are capable of absorbing speculative losses, while others are not.
I agree with you that crowd-pooling gets around this issue, and it's interesting in that respect. But I still think it opens the door to too many unintended consequences.