Everything you said is correct, but I would really like for the SEC to move away from the “accredited investor” angle. I’m not convinced there’s any real benefit to the populace to restrict a limited (not necessarily riskier) set of investments to rich people.
The real benefit is that these investment vehicles can avoid the regulatory burden required to sell to the general public - which involves proving that you ARE sufficiently low risk.
Without providing that proof of lower risk (and a LOT more information), the tradeoff is that you can raise from accredited investors. It is one thing to take $500k from an accredited investor who might wince but can still take the hit if your investment opportunity fails, but quite another to take the same amount from someone for whom it is their entire life savings. Your failure then condemns them to a life of poverty and living on govt programs.
Sure it seems nice and egalitarian for everyone to have the 'opportunity' to invest in riskier schemes, but history shows that the times it ends well do not offset the times that it fails.
It seems every 3rd or 4th generation needs to learn for themselves. Banking and finance go off on a bunch of new ideas, there are systemic failures and boom/bust cycles, enough people realize that this unregulated wild west is a bad idea and put in regulatory fixes, it gets better, then after a couple of generations everyone forgets and says "why are all these damn regulations here keeping me from becoming wealthy?", starts dismantling them, nothing happens for a while, then the failures, boom/bust, etc start again, lather, rinse, repeat...
I don't think Chesterton's Fence is a good analogy here. It's pretty obvious why this restriction exists, it just doesn't seem like it's worth the downsides (to me at least).
If you are saying that this fence should be replaced with a better one (e.g., replacing binary qualified/unqualified w/grades of qualification & proportional investment limits), I might agree, but if you're just saying you should tear it down because you think you see the reasons, it looks like your answer is a great example of the value of Chesterton's Fence analogy.
Essentially you'd rather some people go broke at the expense of others (you?) having more of a chance to get rich, and others prefer nobody has a high chance of going broke or rich. I suppose there's no objective way to settle this, but people have more of a human right to avoid poverty than to get rich, so the former is harder to justify.
