[gumby]

It feels unreasonable but look at the history from the 1910s, 20s and 30s to see why and how those “widows and orphans” rules were put in place.

A lot of ppl think “are they saying I’m too dumb to be an investor?” But actually they are saying “there are lots of scams, so we restrict it to people who won’t be impoverished when they are fleeced by a scam”. You don’t need to be an accredited investor to invest when the info is as transparent as the govt can make it (mainly: publicly traded securities). They don’t get involved if you lend money to your brother in law for his car repair shop (but your BIL can’t put an ad in the paper to raise money without following disclosure rules).

You also can’t just sell any old vehicle for driving on the road either; instead of “accredited buyer” they push all the rules (seatbelts, wheels a certain size…) onto the mfr. When you open an account at Schwab it’s the same thing.

In the end the government is the insurer of last resort (welfare) so like other insurers puts protective covenants in place (banks have to have safes and security guards to get insurance).

[sillysaurusx]

It also feels unreasonable to point to a generation long dead as proof of why we need financial protections today. I could see it if it was for criminal protections, but this particular protection has a risk/reward tradeoff way out of proportion.

If someone wants to risk $10k on a startup, they should be able to. It’s arguably a core American value that somehow got lost.

These are not folks who would be trying to get rich quick — crypto proved that they make for easy prey anyway. These are people who know that the way to get rich is to hold equity that rises in value dramatically over ten years, which the public markets rarely achieve. You’re competing against firms that do it full time, whereas those same firms would dismiss a promising startup whose founders you happen to know.

[throw0101b]

> It also feels unreasonable to point to a generation long dead as proof of why we need financial protections today.

/r/wallstreetbets enters the chat

:)

[yieldcrv]

appeal to authority. here are the missing parts of your argument:

1) accredited investor laws were not always wealth tests. they are wealth tests now for pretty embarrassing reasons: it was the only way a racist industry could be convinced to consider persons accredited more equally. Now, additional ways of accreditation are being experimented with, where certain degrees and exams automatically come with accreditation.

2) poor people are already able to blow their money on negative expected value financial games. It is pure happenstance that those see regulated at the state level while securities are regulated at the federal level, from the individual perspective this distinction is irrelevant: the things that are supposed to be responsible financial games are shut off for their protection, while the irresponsible ones are readily available.

3) this becomes more important because companies stopped doing IPOs at lower valuations. there are no Microsofts and Amazons to buy at $30mm and ride to $50bn. They just IPO at the $50bn valuation and dump shares on everyone that bought in at the top.