Author Topic: 'Accredited Investor' Status  (Read 4845 times)

rajuabju

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'Accredited Investor' Status
« on: April 10, 2014, 08:02:24 PM »
I have a friend who wants to get more involved in various investment opportunities. He is already doing some P2P, but he likes the idea of sites like Realty Mogul and a few others that require him to be an accredited investor... which he does not meet all the criteria.

NOT ASKING for legal advice.. but he basically just made up info and sent it to one of the sites (not going to reveal which one). Apparently they didnt do any kind of actual verification and let him sign up...

Is he at risk of anything? Is there any risk to an investor doing something like this?

Fred93

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Re: 'Accredited Investor' Status
« Reply #1 on: April 10, 2014, 09:21:44 PM »
I'm not a lawyer.  Having said that, I think the answer is that you would almost surely get away with it.  I'm not suggesting that you do lie, just sayin' that it is extremely unlikely that there would ever be anyone who would care later, although  I can imagine scenarios where it could matter.  Suppose you ended up suing the company over something -- exactly what doesn't matter.  I bet their lawyers would check and bring up the fact in court that you lied.  (Lawyers routinely look for anything that will discredit you to get their clients off the hook.)

As to RealtyMogul, the thing that has slowed me down at this point is their fees.  There are three separate kinds of fees that RealtyMoguls scrapes off for themselves, and another layer of fees that the syndicator scrapes off.  Between them seems like they take 1/3 to 1/2 of the profits for themselves.

RM is a very young company.  The literature they share with you to describe the deals, including things like the numbers, including fees, etc, is not very professional.  A lot of it is not even in a document that you can easily archive.  Its largely just on their web site.  I told them this information should be in a legal document we both sign.  We can't have a legal agreement between us with the terms on some web site somewhere that can change.

I don't know whether the deals they present are good or not.  They have no track record.  They say they choose them well, as everybody tryin' to sell you something always says, but there is no evidence.  I haven't taken the time to research the track records of any of the syndicators whose deals they are presenting.

On the positive side, they have a great idea, and are pursuing it and trying to get better at what they do.  As they gain a little maturity, they might become something significant.

Bohb Daishi

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Re: 'Accredited Investor' Status
« Reply #2 on: April 11, 2014, 02:42:23 AM »
NOT ASKING for legal advice.. but he basically just made up info and sent it to one of the sites (not going to reveal which one). Apparently they didnt do any kind of actual verification and let him sign up...

Is he at risk of anything? Is there any risk to an investor doing something like this?

He should be fine. Worst-case scenario, he loses money and can't sue. If they ever find out that he lied though, he would probably have his account closed.
There are three ways to make a living in this business: be first, be smarter, or cheat.

rajuabju

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Re: 'Accredited Investor' Status
« Reply #3 on: April 11, 2014, 09:34:07 AM »
Makes sense on the being able to sue part... for sure I assume that if there was a PROBLEM of some kind with his investment, he'd be SOL because of this. I think my concern for him was more along the lines of him having any real liability.

Still silly but thx

Fred

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Re: 'Accredited Investor' Status
« Reply #4 on: April 11, 2014, 10:23:37 AM »
As to RealtyMogul, the thing that has slowed me down at this point is their fees.  There are three separate kinds of fees that RealtyMoguls scrapes off for themselves, and another layer of fees that the syndicator scrapes off.  Between them seems like they take 1/3 to 1/2 of the profits for themselves.

Thanks for sharing this.  I have been a RM member for a while, but never actually jumped in on any of their investments.  Didn't realize the costs were very high.

Natalie-OBX

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Re: 'Accredited Investor' Status
« Reply #5 on: April 11, 2014, 12:14:40 PM »
This might be total B.S. so take it for what it's worth.  I think I remember reading somewhere that if they advertise the deals publicly, they must verify that you are an accredited investor.  If they instead make you sign up before giving you info on the deals (like Realty Mogul does) then they don't have to verify that you are accredited.

--Natalie

Mr. Dumpling

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Re: 'Accredited Investor' Status
« Reply #6 on: April 11, 2014, 03:13:32 PM »
I believe when is comes to "accredited investor" status, this is required mainly because the nature of the deals are either highly volitale, risky or the number of investors is limited, thus substantial capital is needed from each investor.

My guess, if you have the $5 million requirement for most accredited investors and it's not your life savings, then I dont think there should be a problem/recourse with investing with them.

As far as Realty Mogus, I can't say I know much about them.