> Would love to see them go even further and let just anyone invest
Very broad statement. 'Anyone' in 'any' amount? Surely you are not advocating that. Are you?
In what way do you think the average person 'anyone' knows enough to essentially bet on a typical startup (called it 'gambling')? So you have a typical person living paycheck to paycheck but yes let them put whatever savings they might have into a startup?
I don't believe that restrictions on private investments make sense. If anything, they perpetuate the "rich get richer, poor get poorer" problem. Unaccredited investors are kept out of great potential wealth creation. The problem is not bad investments, it's fraudulent ones. Fraud is still illegal even if you kill the accredited investors restrictions.
I do generally agree with you that the accredited investor definition should just be scrapped entirely, but the problem with fraud is that you usually don't find out about it until your investment is gone, and prosecutions often aren't able to recover anywhere near enough to make the investors whole again. And even when they do, it can take months or years.
Someone with a $20M net worth can deal with losing $1M. It sucks, but it's not going to put them on the streets. Someone who puts all of their savings into a fraudulent investment then becomes one car break-down away from not paying their bills. Consider also if that person is retired and is living on a fixed income.
The kind of people in the latter group are probably more likely to fall for a scam or fraud. I would love to lift investment restrictions -- I absolutely agree that this is a "richer get richer, poor get poorer" issue -- but not without a way to better protect more vulnerable investors.
The first thing that comes to mind is some sort of government-provided investment fraud insurance. But then I worry about perverse incentives: every time someone's investment tanks, they're incentivized to try to prove that the investment was a fraud.
It sounds then, instead of accredited investors, we need an accredited capital investment designation. Allow anyone to invest, but require those who would seek investment from anyone to be under more scrutiny. Of course, this is only if the one seeking investment choose to do so.
Isn't this just called a "public company"? (Not sure if your comment was tongue-in-cheek. If not, I'm genuinely unclear how this is different from the current situation.)
I think there's an argument to be made that the current rules create obstacles for Ponzi schemes and other conmen, but I'm genuinely in agreement that restricting action based on personal wealth is a great way to keep the poor from moving up. I think day trading is the worst example, especially when you compare its risks to options which have no such restrictions
For the most part, the government shouldn't get to tell people what they can or can not do with their money. We don't currently stop people from going to vegas, buying lotto tickets, buying expensive cars, clothes, buying education, etc.
Said another way, 'anyone' can invest 'any' amount in a public stock today and lose it all tomorrow. Heck people were even suckered into mortgages they couldn't afford by our trusty banks.
So you have a typical person living paycheck to paycheck but yes let them put whatever savings they might have into a startup?
While I think there is some merit in restricting what purchases people can make beyond their means, only applying it to certain types of speculative investment (which doesn't even include things like real estate) seems arbitrary to me when it's not applied to something with even more risk like gambling, say.
If the average person could bet their life savings on red at the Roulette table, what’s different about allowing them the freedom to bet on risky investments? At some point adults should be adults and be responsible for themselves. Of course fraud should remain illegal, but assuming fraud isn’t involved, why not let anyone invest in anything?
Very broad statement. 'Anyone' in 'any' amount? Surely you are not advocating that. Are you?
In what way do you think the average person 'anyone' knows enough to essentially bet on a typical startup (called it 'gambling')? So you have a typical person living paycheck to paycheck but yes let them put whatever savings they might have into a startup?