December 19, 2019
Madams and Sirs, As a career managing member of private funds since 1996 and Registered Investment Advisor Representative since 2015, I welcome the update and all proposed guidelines to Accredited Investor qualifications. For your additional consideration, I think it would be helpful for all concerned to streamline the thresholds of participation in private funds. Given the 99 Accredited Investor limit on exempt private funds, their investment managers have incentive to raise the minimum investment of Accredited Investors to a higher level than Qualified Purchasers, who have more wherewithal. The net impact is that lower-threshold Accredited Investor have to place a higher personal allocation into the private fund, as a percentage of his or her portfolio. This seems to be an unintended consequence of necessary protections. The most logical solution would be to raise significantly the Accredited Investor limit on exempt private funds, which would eliminate the incentive of fund managers to force Accredited Investors into a higher portfolio allocation to less liquid and potentially riskier private funds. Investor protections and private fund status would maintained as long as fund managers register with the Commission and accept subscriptions from investors, complete with wealth and income verification. The chain of responsibility would not change, as it would remain on the fund manager to comply with AML-KYC and wealth and income thresholds set by the Commission. Thank you for your consideration. Sincerely, Paul Brodsky New York