My understanding is that in the US, accredited investor laws are in place to protect people from investing in high-risk ventures. This is, for instance, why KickStarter couldn't offer stakes in the venture to contributors, and why crowdfunding will not scale beyond certain level.

But the main question I have is how this law applies to non-US citizens. Also, I would like to ask some request for comment about why would US lawmakers go to all the trouble of extending such financial "protections" (if they can really be called that) to non-citizens.

  • Most laws are written without regard to the citizenship of the people affected by the law. Why would the law you're asking about be an exception? – phoog Dec 25 '18 at 19:34

Unsourced answer:

  1. Because by not extending it to non-citizens, it would violate equal protection clause of the constitution. Resident non-citizens would be treated differently from citizens. Courts may not like that.

  2. Because by not extending it to non-citizens, they would simply let a citizen use a non-citizen as a front for investing in such.

  3. Because these laws are a pretty/fluffy/benevolent sounding excuses whose real goal is to prevent small fry from competing with powerful big-money investors for really good investments. So if the goal is to limit who can participate, you don't want to include non-citizen riff-raff no more than citizen riff-raff. < /tinhat>

  • Exactly what I thought, but I was holding hope of a somewhat less cynical answer.. – lurscher Jan 8 '14 at 6:15
  • @lurscher - less cynical? You're on the wrong SE :) – user4012 Jan 8 '14 at 14:23
  • @user4012 the reason these laws exist is because people were being misled into thinking they were making a sound investment when really it was more like buying a lottery ticket, they were losing lots and lots of money, and they were left needing government assistance. The goal is to protect people who don't have the time, knowledge, or energy to perform necessary due diligence (and, to be fair, they should just be investing in ETFs in general). – David Rice Dec 27 '18 at 16:49
  • @DavidRice - as I actually have subject matter expertise, I know for a fact that this is rather an invalid excuse. The chances of losing your investment in an average accredited-investor-only vehicle are far far far lower than of buying samesaid lottery tickets - yet no laws exist prohibiting people from spending (or rather wasting) their last dollars on lottery tickets. – user4012 Dec 28 '18 at 0:45

Everyone in the economy is in the economy. Suppose a million non citizens investment in some stupid scheme. If they lose their shirts to the schemer, that's one thing but after going unexpectedly broke, they will default on kosher obligations. Even though the country doesn't owe the foreigners protection, it will be in it's interest to do so.

  • "Even though the country doesn't owe the foreigners protection": Does it owe such protection to its citizens? If so, why, and why does that duty not apply to foreigners? – phoog Dec 26 '18 at 16:33
  • I was just going along with the premise of the original question that citizens should be protected more than non citizens. Owing is really irrelevant to the entire situation. – Clint Eastwood Dec 26 '18 at 16:51

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.