This may seem slightly redundant, in light of David Foster’s post below which inspired me to post this on my own blog, but Lexington Green strongly felt that the point could stand repeating ( or shouting from the rooftops). So, here goes:
Senator Chris Dodd (D-Connecticut) is working hard in Washington…. to make sure that only those who are already Rich and Powerful will have a shot at being rich and powerful.
From Rick Tumlinson at Huffington Post:
- Start-ups have to register with the Security Exchange Commission and then wait 4 months minimum for it to review their filing. This is a lifetime in the fast moving world of start-ups. (Keep in mind you and your employees are living hand to mouth everyday there is no money coming in.)
- Accredited investors (those who can legally invest in start-ups) would be limited to those with assets of over2.5 million (up from1 million) or a personal income of450,000 (up from250,000). This knocks mom and dad and uncle Bill right out of the game for most entrepreneurs. How many multi-millionaires in your family and close friends?
- Removing the federal pre-emption which provides a single set of national regulations and forcing companies to deal with state-by-state variations in rules. Most start-ups are kitchen table corporations at first. We have no money to pay lawyers to figure things out for us. That’s why we are looking for funds in the first place. Duh!
This is so egregiously wrongheaded and economically counterproductive on so many levels that it’s hard to know where to begin. Even the big money Obama backers of Silicon Valley are calling this bill “insane” . There’s literally no upside to these provisions which limit the field of potential start-up investors to a professional insider’s club skilled at wheedling favors from the SEC behind closed doors. That may be the objective of these rules.
You middle-class serfs can get back to the fields now. Creating start-ups and making investments are not for your kind.
This bill will end US entrepreneurialism as we know it. Yes, it really is that, bad, we need a full court press filibuster.
Even the big money Obama backers of Silicon Valley are calling this bill “insane”
They get what they pay for; too bad it isn’t what they really wanted. All that ugly anti-Capitalist, anti-bourgeois rhetoric bears fruit and suddenly the parrots start squawking. Too bad: let deeds match words. Maybe we can cut a deal: yes to this bit of Bolivarism; no to the rest. Why shouldn’t the pirates of silicon valley suffer like the rest of us?
Establishment?
The 16th & 17th Amendments, plus the Federal Reserve Act, brought on such ~100 years ago.
See related video here.
At a time when we should be carefully examining the legal code at all levels for jobs we can honorably legalize to get americans working, Chris Dodd is running full tilt in the opposite direction. It’s not just wrong. It’s disgusting.
It would be interesting to find out who drafted these amendments, and how they got into the draft bill.
Some of them are things that the SEC could have done by rule, but had not. E.g. the definition of “accredited investor” is only found in SEC rules. The numeric thresholds were adopted back in the eighties, and no doubt need to be adjusted for inflation, if, that is, it would really help anyone.
I don’t think anybody associated the current financial crisis with the private placement market, or with venture investments. The bear market in stocks very clearly followed the credit market implosions. Why this type of proposal is in this bill mystifies me.
OMG, as a resident of CT, I’m so tired of looking at his flaccid, ugly mug.
In case anyone hasn’t yet gotten the memo – this regime is trying to burn the the United States to the ground and build a totalitarian system on the ashes of the most exceptional country in human history.
Obama’s rule is a regime. Dodd is just one of the members of the American Nomenklatura. Tatyana and I have seen this movie before and it’s going to end badly. Just never thought it would happen this quickly.
Some of them are things that the SEC could have done by rule, but had not. E.g. the definition of “accredited investor” is only found in SEC rules. The numeric thresholds were adopted back in the eighties, and no doubt need to be adjusted for inflation, if, that is, it would really help anyone.
Have you any idea how stupid those numeric thresholds are?
The numeric thresholds are meant to identify one as a savvy investor. Does the amount of money you make say anything about how savvy you are?
What this means is that a portfolio manager who doesn’t meet the current threshold is deemed too stupid to figure out what to invest HIS OWN MONEY in (even though he makes that decision for his own investors hourly). Paris “do they sell walls at Walmart?” Hilton, on the other hand, is the very picture of a savvy investor because her grandfather left her a lot of money.
How about this: Let everyone decide how to invest their own money?
The SEC is filled with idiotic rules that protect investors from nothing more than lower transactions costs and more liquidity while allowing the “too big to fails” run roughshod over them.
The formula is simple:
I/r = P
Set the amount of income you have to have. Estimate an interest rate less inflation, divide, and you get the amount of capital you have to have if you’re going to retire.
Do it. Anyone reading this site will discover — probably discovered decades ago — that you have to accumulate between 10^6 and 10^7 dollars. That is precisely the level of capital formation that this administration is trying to make impossible. They will continue to encourage tiny capital formation – an extra 10^3 saved each year at 0.15% interest rate. They will continue to kiss the butts of people with 10^9 – 10^10 dollars. But make no mistake about it, they are trying to make our retirement one monolevel of misery.
True, in a free country, the government would not be in the business of “accrediting” investors in the first place.
We can count ourselves lucky that Dodd is not, and never has been, chairman of the Banking, Housing, and Urban Affairs Committee. Think of how much damage Dodd could have done over the years in that position!