| Beg to differ. Whenever I walk through airport security, I have Osama to thank for the millimeter wave inspection. And for the pain of raising money from non-accredited investors I have hundreds of historical and would-be scammers to thank. Bad guys make us limit our freedom. Although we ask the government to protect us, they usually mess it up by ham-handed regulation. At the airport, the big show makes us feel safer, even though some experts say we aren't. The same thing has been going on in finance for years with Congress and regulators asleep at the switch with no idea how to control the bankers. They lack imagination and incentives. We need to completely rethink regulation for investment vehicles. The goal should be to improve post-issuance transparency. Real transparency. First thing we need is a live feed of transactions logs. All of them. Dirt cheap these days. No fancy accounting, I'll model the company myself thanks. I can share models with fellow investors. I/you/we can sell modeling capability to investors. More sunlight--less corruption, less risk. The lack of transparency and disclosure that may about to be enshrined in Regulation A is like handing out the box cutters on the airplane to al Qaeda. The threat is not you or me. It's scammers. Right now about all the protection Mom will have is the SEC banning "bad actors" years later--if they get caught. Just like they caught Madoff. Professional financial accounting? Enron's books were audited by a top firm. Instead regulation should require you to show me the money, continuously, with timestamps, please. Oh, and send me my government mandated Salesforce.com login too please. Let's do for banks too. Make it fair for everyone. OK, now you can sell my Mom your stock. |
My suggestion: treat it like options trading. At many brokerages, getting options enabled (esp. uncovered options) requires proof of investment acumen and specific forms to be filled out. Can you seriously make the case that small-scale angel investing is more risky that options investing?
[1] Many of them chose to work at lower-paying positions (eg. startups or research-type positions), or just in relatively lower-earning areas (aka, the MidWest).