The regulatory trade-off made by the SEC in permitting issuers to advertise a private placement was to have them take reasonable steps to verify that the purchasers are, in fact, “accredited investors.”
In today’s Wall Street Journal, an op-ed writer suggests that making angels prove that they are actually accredited will chill their passion for investing in the hot new startup.
This commentator believes that self certification is sufficient (it will still be available for non-advertised offerings). But the loud protest almost makes it appear that self certification is just a wink and nod at compliance and that many angels, if tested, might not really have the income or net worth to qualify.
If there are numbers out there that can prove this one way or the other, I’d like to see them.