Rich Investors Deserve Better Investor Protections
The Bernie Madoff scandal has exposed gaps in our federal securities laws, in addition to the pocketbooks of wealthy investors, including fund managers. The idea that rich investors have any more ability to avoid frauds than the everyday main street investor is ridiculous, and the Madoff case should end with strong regulation changes.
I have a hard time understanding the need or appropriateness of the accredited investor standard that has been written into our securities laws. The law basically assumes that rich individuals are somehow more capable of investing their money, especially in complex investments, like hedge funds. An Accredited investor must have a net worth of at least one million US dollars or have made at least $200,000 each year for the last two years ($300,000 with his or her spouse if married) and have the expectation to make the same amount this year.
This standard should be removed going forward. The Madoff scandal has taught us that if anything, rich investors have more to lose and should be regulated as such. All investors should enjoy the same protections against scammers like Madoff and a dollar amount of your net worth should not be the determining factor between federal protection or not.
Michael Jordan was an extremely talented basketball player, and thus has made a lot of money throughout his career. This doesn’t make him a talent derivatives investor and exempt him from federal laws does it? Warren Buffet is one of the best investor of all time, but this doesn’t mean he should receive less protection in other areas of his life like on the surgery table does it? We don’t exempt the rich in any other regulated area in our society, so why is investing any different? $
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