Attorney · Los Angeles, CA · Member since 2016 · 284 posts · 314 votes
I came across a funny article this morning.
Your SEC Investor Advocate--who is supposed to advocate on behalf of investors--doesnt seem to think that non-accredited investors want to invest in private offerings, and that private companies don't want non-accredited investor money. This is in context of a discussion to revise the definition of accredited investors.
Funny thing is, I feel like every other day lately, there's been someone asking on a forum about finding syndication deals that will take non-accredited money. I guess some of you have to write your Investor Advocate.
@Amy Wan, fact of the matter is, there is more non-accredited investor money available in the market than accredited investor money. Here's another fact ... There are more Reg D 506(B) offerings that are filed with the SEC, than Reg D 506(C), which only accepts accredited investors. Simply put there are a ton of non-accredited "sophisticated" investors who want to invest in private offerings/syndications, but may not be aware of the available opportunities out there.
While I see you point of view, it could also be said the sophisticated investors who are not accredited represent less wealth (cash to invest) than the people who are accredited.
The SEC is not there to help people grow their wealth. It was put in place to reduce the number of scams naive investors are exposed to. If that means protecting people from some stuff which might have turned out well, so be it. Consumer protection first. Accredited investors are effectively excluded from the protections. Too many consumers complain when they make a bad choice and there are enough of them to influence elections.
@Amy Wan thanks for sharing. Would you mind expounding on the Concept Release he mentioned at the top, and how it may or may not impact syndicators and their investors?
I agree, there have been numerous posts lately about finding syndication investments for sophisticated investors. To be honest, it hasn't been that hard if you're willing to put yourself out there. It just takes work and time!
It looks like a frightening document but the accredited investor discussion starts on page 32 and its about 30 pages long (and its double spaced)--so not THAT bad. Basically, the SEC has been talking about amending the definition of an accredited investor for years...as long as I can remember.
@Amy Wan talk about light reading before bed! I'll keep working on this. Something that stuck out to me was:
"Should we consider rule changes that would allow non-accredited investors to participate in exempt offerings of all types, subject to conditions such as a limit on the size of the offering, a limit on the amount each non-accredited investor could invest in each offering, across all offerings, or across all offerings of a certain type, a decision by the investor— after receiving disclosure about the risks—to opt into the offering, and/or specific disclosure requirements?"
Since when, and in what situation, can any investor not back out? Accredited or not accredited.Are there any cases where sponsors get investors to sign binding agreements before disclosures are made?
I've always found it ironic that the SEC won't allow individuals to invest in securities that may be the best way for them to build wealth. At the same time the SEC is fine with the same individual participating in far riskier investments in public markets (trading options, etc) and your state will sell you as many lottery tickets as you can buy. Of course the state can openly advertise the lottery while if someone is raising funds for a 506(b) offering for a relatively lower risk stabilized multifamily project open solicitation isn't allowed.
@Amy Wan, fact of the matter is, there is more non-accredited investor money available in the market than accredited investor money. Here's another fact ... There are more Reg D 506(B) offerings that are filed with the SEC, than Reg D 506(C), which only accepts accredited investors. Simply put there are a ton of non-accredited "sophisticated" investors who want to invest in private offerings/syndications, but may not be aware of the available opportunities out there.
Here's another fact ... There are more Reg D 506(B) offerings that are filed with the SEC, than Reg D 506(C), which only accepts accredited investors.
@tj hines this is because RegD 506B offerings CAN accept sophisticated investors, many do not, and most of those that do limit the number of sophisticated investors they accept
@Amy Wan, fact of the matter is, there is more non-accredited investor money available in the market than accredited investor money. Here's another fact ... There are more Reg D 506(B) offerings that are filed with the SEC, than Reg D 506(C), which only accepts accredited investors. Simply put there are a ton of non-accredited "sophisticated" investors who want to invest in private offerings/syndications, but may not be aware of the available opportunities out there.
While I see you point of view, it could also be said the sophisticated investors who are not accredited represent less wealth (cash to invest) than the people who are accredited.
The SEC is not there to help people grow their wealth. It was put in place to reduce the number of scams naive investors are exposed to. If that means protecting people from some stuff which might have turned out well, so be it. Consumer protection first. Accredited investors are effectively excluded from the protections. Too many consumers complain when they make a bad choice and there are enough of them to influence elections.