The SEC intends to 10X the “accredited investor” definition
The Securities and Exchange Commission is intending to raise the “accredited investor” definition to $10 million. This means to invest in certain start ups or unregistered shares, you would have to be worth $10 million.
The SEC is a government oversight agency that is responsible for regulating the securities markets and protecting investors.
Can we say this is just another governmental rule that helps keep the abyss between the rich and the poor VAST. This rule, if the SEC implements it, is the government’s way of burning the bridge of a poor or middle class person’s path to wealth through investing in start ups that actually have the potential to make huge returns. Interestingly, however, this rule further empowers the rich to get richer.
Gary Gensler who is the new chairman of the SEC believes his purpose in life is to protect amateur investors in the market and this $10 million dollar “accredited investor” rule is his way of doing it. But many of the people who got rich from the market started off as amateur investors and truth be told they still are. They just have a willingness to continue in the game and they got a few big wins they make them look like they know what they are doing.
This $10 million dollar rule is once again a discriminatory tool backed by the good ole U.S. government that has a disproportionate impact on marginalized and impoverished communities. Unnecessary rules like this is what keeps people marginalized.
The government keeps setting the entry point to wealth accumulation so high that the average person just gives up on creating serious wealth.
But why now SEC?
Currently to qualify as an accredited investor, one must have income of at least $200,000 a year or a combined household income of $300,000 in the past two years. Also, if you have a net worth of more than $1 million jointly, excluding the value of your home, you can also qualify as an accredited investor.
This current rule is already draconian and unnecessary in my opinion and I really thought the SEC was about to rid us Americans of this rule.
Many people that are not rich today are investing in crowdfunds and cryptocurrencies that don’t require you to be an accredited investor. Today, there may be now more than 100,000 people who have become bitcoin millionaires who started with nothing but a $1000 risk of a bitcoin purchase. They had no advance knowledge, they were not an accredited investor by the SEC’s current standard. These people were just willing to risk the investment they had made in bitcoin.
Some people are making money from crowdfunding opportunities as well. I had invested in two start ups over a year or so ago and both had exits, one was sold and I got my investment back and one company went public so now I went from owing unregistered shares to registered shares.
But some of the best unregistered companies available to invest from my research require you to be an accredited investor and they also require significant buy in amounts like $25,000 minimums. These rules set by the companies themselves is sufficient to keep out people not able or don’t have the stomach to take the risk of the investment. The SEC’s accredited investor rule is unnecessary.
It’s time to eliminate the middle man in certain areas of our lives. This is why cryptocurrencies are so important for such a time as this. We don’t need an investor-god like Gary Gensler and the SEC telling people that we need $10 million to make an investment in a company we have the funds and desire to invest in. Are they going to create a stupid rule like you need $10 million dollars to invest in certain cryptos if they determine cryptos to be securities?
Don’t invest what you are not willing to burn is the rule I follow and be willing to read and learn along the way. Will you lose your money sometimes, yes. Will you make money sometimes, yes. The risk is the investment, the return is the gain. But you can never have the gain if you don’t take the risk. Taking the risk is how you grow money if growing your money is what you want. And taking that risk should be solely dependent on your desire, your funds available and your plan.
The days where all the investment knowledge was only available to stock brokers and investment banks are gone.
This new $10 million plan the “wicked witch of investment” is planning to implement contradicts what the SEC’s Small Business Capital Formation Advisory Committee (“Committee”) recommended. The Committee recommended to the SEC that it should expand the definition of an accredited investor so that it can address diversity, equity and inclusion in capital markets and avoid exacerbating the wealth gap.
Well, Gensler must have had a hearing problem on the day of that meeting because increasing the accredited investor definition to $10 million EXACERBATES the wealth gap and it does so with a BIG MIDDLE FINGER to any one not already rich, whether you are black, white, or any other labeling color we have in America.
Shelly Bell, founder and CEO of Black Girl Ventures, a nonprofit crowdfunding organization, spoke at an SEC meeting and said, the inclusion of more people also pushes economic development, ingenuity, returns for a group of people who’ve been historically financially locked out of the ability to buy homes, locked out to levels of loans and access to capital.”
I guess Gensler let what Bell said go in one ear and out the other. If they implement this $10 million dollar rule, Bell your words went on death’s ear because Gensler wasn’t listening.
Why even have these meetings and speakers if you are not going to listen? Oh to seem like we are a democracy, everybody matters and the American dream really is available to us all.
Jake Cherwinsky, who leads policy at a crypto lobbying organization called Blockchain Association, said in a tweet, “in my opinion, there should be no wealth test for access to investments, end of story. Although perhaps well-intended once upon a time, the accredited investor rules are regressive & contribute significantly to inequity in America. They’re long overdue for a major overhaul.”
I could not have said it better Cherwinsky, so I will end with that.
ABOUT THE BLOGGER
La Shon Y. Fleming Bruce a/k/a SHONSPEAKS is a blogger, speaker, and lead creator of freeyourthinkingmind.com. I am also a lawyer and managing member of The Fleming-Bruce Law Firm, P.L.L.C. If you want to check out more of my writings that may not be released on this site, go over to my website at freeyourthinkingmind.com
Order ShonSpeak’s “Learning to Be” Original NFT from my collection by clicking link below
Order your copy of Elisabeth Hoekstra’s newest book by clicking link below