U.S. SEC to review accredited investor rule

U.S. SEC to review accredited investor rule
By Reuters
Friday, July 25, 2014 Email this story | News Tracker | Reprints | Printable Version

WASHINGTON (Reuters)—A U.S. Securities and Exchange Commission review of its "accredited investor" rule could ultimately make it tougher for brokers to sell privately traded securities, a high-risk, high-reward, high-commission staple at some small and independent firms.

Under the rule, only well-heeled investors are permitted to buy these private placements – securities that are not registered with regulators or traded on exchanges. The idea is to protect Mom and Pop investors from the risks of these illiquid securities, typically issued by small or startup companies and sometimes found to be issued or sold fraudulently.

The criteria, in place since the rule was established in 1982 and never adjusted for inflation, generally require that investors have $1 million in assets or earn at least $200,000 a year to qualify to buy these securities.

But some critics want the SEC to impose other criteria, such as certain professions, arguing that net worth and income are not the best measures of investor sophistication. Others, including the U.S. Government Accountability Office, say the 1982 levels are too low.

http://www.hedgeworld.com/open_news/read_newsletter_aa.cgi?section=legl&story=legl3516.html

 

This would be the death of small business financing in the US. It would break the last stronghold of market capitalism. The SEC is becoming the stronghold of socialists.

 

They adjust for inflation what is convenient for them, what about adjusting the $3,000 carry forward capital gain loss that US mom and pop have as limit?

 

It is also stopping equity crowd funding which is taking off in the UK.