From Trader Daily:
Does the public want to be protected from its own feeblemindedness in judging investment risk based on wealth? The SEC asked, albeit not in those words, and the public took ample advantage of the opportunity to comment. The answer was an emphatic: “No!” Last December the SEC proposed raising the required-asset bar for would-be investors in hedge funds and other pooled investment vehicles. The period for public comment on the suggested rule change ended on Friday, and the SEC had received more than 500 responses to what it had predicted would be an uncontroversial issue. Individuals from around the country protested the notion that assets in the safe were any way to judge financial acumen. Investors who qualify under current rules were horrified that they could be regulated out of the best and broadest range of investment opportunities available to them now. Some industry voices also questioned the impact on competition, as newly created hedge funds often depend on smaller investors to get off the ground. This feedback, though, may not be enough to influence the SEC’s ultimate decision on the rule. Since December, there has also been a contrary trend in thinking, which is that the higher-level entry requirement should also be extended to investments in private equity. As distinctions in investment strategy become harder to make among hedge funds, private equity and venture capital, the result may be a broader investor accreditation requirement applied to all.