You are basically saying that accredited investor rules are not successful in excluding people from making certain types of more desirable investments, because there are other barriers that are in place anyway. I think this is true, but beside the point. If you want to have an even playing field for investing, every barrier is an obstacle.
I think you missed my point. To reiterate: the fact that people believe that it's not true is, ironically, a convincing justification for the accredited investor rule.
I'm pointing out the irony, not defending the rule per se.
> If you want to have an even playing field for investing, every barrier is an obstacle.
This clearly isn't true.
First, it's sort of prime facie false. Investments usually happen in markets. Markets are human inventions comprised of collections of barriers on behavior and enforcement mechanisms for those barriers. (Investments that happen outside of markets do exist, but they usually involve violence and/or coercion under threat of violence, so probably not what you mean when you say investment.)
Second, there are many ready examples. E.g., SEC filings and public exchanges are clear barriers to entry in fund raising, but also clearly level the playing field. The alternative is that the only way to know about a company's finances is to know the right people.
I agree that markets are not natural and don't happen magically without human oversight and rules. But generally we want those systems to increase participation in the market. The criteria of net worth as a obstacle to market participation seems pretty indefensible here. It is hard for someone to commit to changing their net worth in the same way that a company can decide to become public, or that a wealthy person can sign a contract saying they are aware of investment risk. I would support some rule like "you must have either this net worth or prove that you are knowledgeable about investment in some way". The criteria has to be something that people are able to overcome.
At the risk of sounding like an incredibly broken record:
>> I think you missed my point. To reiterate: the fact that people believe that it's not true is, ironically, a convincing justification for the accredited investor rule. I'm pointing out the irony, not defending the rule per se.
and
>>> I'm not even an avid fan of the accredited investor rule.
So, as I've stated in every single post in this thread, I'm not defending the accredited investor rule. Cool?
The justification for the accredited investor rule is "people are idiots". Again, not even that rich = less of an idiot. The premise of the rule is that rich people can afford to be bamboozled by scams and shitty investments... er, I mean, take on "higher risk investment opportunities".
I find that justification uncompelling on face.
But then people come along and complain "I can't use prosper.com to make unsecured personal loans to randos for an expected return of 5.7% per annum on loans with 15%-20% APY during a time when every other asset class out-performed and with the front end of that window overlapping with a time when unfathomably higher quality debt products were offering similar returns on 3 year timeframes". And just listening to them makes me second-guess myself.
My point? It is ironic and humorous that the most compelling justification for the accredited investor rule is listening to people talk about how they would invest if the accredited investor rule didn't exist.
For the record, since people keep completely losing the plot: I think something like an educational requirement makes a lot more sense.
neither you nor parent post are absolutely right, of course. In the USA in the 2000 era, a lot of people with the ability to place large betting stakes on the table, using access to market-makers and leveraged buys of all kinds, were able to push around a LOT of money, mostly profitable, for quite a while. The party ended, except it didn't. The same over-leveraged tactics by players with access, except this time against one of the most protected asset classes, homes, almost collapsed the entire system with their excess. There are tomes written about this now, fifteen years later. Its not clean, fair or balanced.
