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The Sophisticated Investor Farce
John E. Girouard, 03.24.09, 12:30 PM EST
Supposed ''smart money'' made the stupid choices that got us into our mess, aided by some bizarre SEC rules.



Corporate jets, million-dollar bathrooms and bailout bonuses make for sexy headlines in the great blame game swirling around our economic catastrophe, but the real culprits aren't crooks, risk-junkies or incompetent regulators. It's a legal system that, in effect, says people who have or control a lot of money are automatically smarter than the little guy and therefore don't need as much protection. The last year proves this assumption false.

Many wealthy people, pension trustees and portfolio managers turned out to be just as incompetent as any amateur. This is a group of people defined by statute as "accredited" or "sophisticated" investors. The farce is that there is no test, license or registration required to be "accredited" as a "sophisticated" investor