While I'm not unsympathetic to the libertarian argument against it, there is a compelling social purpose to preventing middle class retirees (and would-be retirees) from getting used as checking accounts by out-and-out fraudsters.
We see the effect of laissez faire accredited investor rules in e.g. the cryptocurrency industry, which just pretends that there are no laws and yet has not been burned to the ground yet. It results in not merely scams but optimized predation machines.
Usually you'd hope to tweak a regulation a bit at the margins and get a bit of a positive impact at the margins, but accredited investor regulations have unfortunate margins to them, because almost all of the money and all of the expertise is *nowhere near* the thin dotted line.
People who are (by the standards of projects requiring lots of growth capital) poor and unsophisticated are bad investors to have. They have an annoying tendency to ask questions like "Will I get my money back?" and "So how are things going?"
Rich, sophisticated investors ask these questions too, but they tend to ask them less frequently, less in absolute aggregate (because you'll need less investors), and, crucially, in the class-inflected ways that being rich and sophisticated suggests you should communicate.
This means that high-potential companies which need lots of growth capital are going to continue getting it from salesmen who bundle up their needs then pre-resell them to limited partners.
Most companies who dip their toes in e.g. "Raise $1k from 10k regular folks" will be adverse selection problems; $10 million was not on offering from the folks who putatively know what they're doing.
(The con case to this is "Ahh but 10k committed evangelists in consumer.")
(The con case to this is "Ahh but 10k committed evangelists in consumer.")
I know a lot of folks who are in the orbit of Silicon Valley who are not, technically speaking, accredited investors, but who would like to be accredited investors, partly for cachet, partly for social reasons, and partly because there are genuine opportunities available.
Here's the general way this plays out, assuming all parties are "in the know":
"What's your salary?"
"Healthy but nowhere near the bar."
"What's your net worth?"
"Barely a positive number."
"Really. You own virtually nothing."
"I have virtually nothing in checking."
"What's your salary?"
"Healthy but nowhere near the bar."
"What's your net worth?"
"Barely a positive number."
"Really. You own virtually nothing."
"I have virtually nothing in checking."
"What company in Silicon Valley is worth what it has in checking?"
"... Oh."
And after that it's a quick exercise in accountancy. (Run it by your own lawyer or accountant; reporting not endorsing, etc.)
"... Oh."
And after that it's a quick exercise in accountancy. (Run it by your own lawyer or accountant; reporting not endorsing, etc.)
