Investor Protection Act

  

Categories: Regulations, Investing

Bernie Madoff was arrested in late 2008 after a $65 billion Ponzi Scheme he had been running for decades collapsed in aftermath of the financial crisis. Politicians looked at the scandal and asked themselves, "Wait, how exactly did a guy run a $65 billion Ponzi Scheme for decades without getting noticed by any of the many regulators we have in charge of this stuff?"

The ultimate result of that musing, along with other regulatory soul-searching following the financial crisis, led to the Wall Street Reform and Consumer Protection Act of 2009. It gave regulators (especially the SEC) broader powers to fight Wall Street scams and other white collar crimes.

The reform wave included the Investor Protection Act. It set up a fund that authorities could use to incentivize potential whistleblowers to come forward. It also increased the punishments for people convicted of helping scammers.

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Finance: What is an Accredited Investor?9 Views

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Finance a la Shmoop. What is an accredited investor. Well the difference

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between an accredited college and an unaccredited college, can be like you

00:13

know the difference between Princeton, and the school of Feel Good Energy, that

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your great Aunt Bertha, set up in her garage last year. Yeah different kind of [woman dancing in garage with disco ball]

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college. Well accredited investors work on a

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similar idea. A bunch of someone's have come along and agreed that accredited

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investors, have a bunch of qualifications. In other words they're legit. So

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accredited investors are simply investors, who qualify to do a certain

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investment. Usually accredited means, that they have credit, or assets, or wampum, or

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knowledge, like intellectual capital, instead of financial capital, or along with

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both. Which means that they're big boys and big girls, who are able to invest a

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large amount of money, in a risky venture. Officially they're investors who have an

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income of at least $200,000 for the past two years, three hundred thousand for [checklist for investors on chalkboard]

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joint accredited investors, like married people or partners, or have a net worth

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of at least a million bucks individually, or jointly, or our executives, partners, or

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directors of the entity issuing those securities. Meaning raising the dough

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itself. Institutional investors, such as mutual funds, hedge funds, and pension

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funds, also fit the bill. Additionally entities can be considered

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accredited, but their threshold is 5 million bucks in assets. By the way if [man talking on lawn]

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all the owners of an entity, like a law firm or something like that, are

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accredited, well then the entity is considered accredited

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as well. So yeah they're accredited investors. Not to be confused with a

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credited investor, who is really excited to have a small part in a movie. [guy in movie theater]

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