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I just noticed this Meta Money.SE post, What to do with potentially criminal scenario questions? It was a good catch. The subject was Money.SE policy about inquiries with plausibly illegal intent. I realize that it is not easy to make rules about the general case; all the answers seemed reasonable to me.

The particular subject of the original question pertained to qualified investor status under Rule 506 of Regulation D and Rule 144A of the U.S. Securities and Exchange Act of 1934. The SEC recently changed certain rules about securities offerings in order to implement JOBS Act requirements. The Twitter IPO, most noticeably the initial "confidential" S-1 disclosure, is one example. Unless we are very certain, I suggest proceeding with care. That question was especially bad, because it was seeking to accomplish something that would be illegal prior to AND after the JOBS Act changes.

I would suggest that we act quickly when there is a question that would plausibly break a variety of U.S. laws e.g. SEC, Internal Revenue Service, Federal Trade Commission. Such inquiries are usually outside the scope of Money SE. With the JOBS Act, there will be new questions, as the new legislation introduces opportunities that were not possible under previous investor and general solicitation rules. We should welcome that, as it provides new opportunities for us, by increasing interest in Money.SE and thus increased site activity! However, there was agreement (based on up vote count) that because we are not attorneys, we should not act decisively when there is a question whose legality is uncertain. That seems unwise. It is reasonable to inquire about the definition of qualified or accredited investor, though.

The intent of my post is to elicit discussion. I am not asking a question per se, thus my choice of the tag.

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  • "break a variety of U.S. laws e.g. SEC, ..." so are we OK breaking UK/Europe or Asia/Africa laws. – Dheer Nov 13 '13 at 2:15
  • @Dheer I knew someone would say that :o) Rule 506 and Reg D changes as mandated by the JOBS Act, also known as U.S. crowdfunding rules, are specifically for U.S. securities solicitation. Yes, that's very U.S.-centric of me. – Ellie Kesselman Nov 14 '13 at 6:33
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I am confused. Are you answering that other question, or posing a new question?

For the record I did provide some decisive action.

  1. Call it wrong, and explain why.
  2. Call it wrong, and explain the intent and possible confusion
  3. Ignore it because it is a bad question (aka Don't feed the trolls)
  4. If you feel it doesn't belong on the site, flag it so a mod can remove it.

All of those are strong, action oriented items that will have the effect of (I hope) making the Internet a better place.

Remember you are not an attorney (I don't think, I believe you work in finance). I'm not at least. So we can't really say what is and isn't illegal when it comes to some of these finer points. But what we can say, as a community, what does and doesn't belong here.

(Please bear in mind I am speaking to the generality. although there was a specific question that sparked the discussion, it isn't germane to the topic of site rules going forward.)

Furthermore, if the community happens to have information about how the break a law, that isn't a problem. (Morally perhaps, but see my first response.) If somebody chooses to the break the law, that is a problem, but not ours.

If I misunderstood your question, please let me know.

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    I revised my question. I want us to be extra careful because the JOBS Act rules are new and uncharted territory. In the past, questions about solicitation under Reg D would not have been within our scope, as a personal finance website. Instead, such issues were relevant for institutional investors. Now, that might change. The rules aren't completely finalized yet, though some were as of October 2013. It is confusing and complicated, and I just want us to be extra careful due to the newness, thus unfamiliarity of these laws. – Ellie Kesselman Nov 12 '13 at 8:47
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In general, I think we do a decent job of answering factual questions accurately, and "see a pro" advice where appropriate.

New laws come up all the time, and the tax code changes are frequent, with new numbers and tinkering every year just to keep up with inflation/COLA. Curious why this particular set of rules has your attention.

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  • This is the so-called crowdfunding rule, the one that will supposedly break down the class and wealth-based gates of small-company investing, making it possible for somewhat ordinary people to invest in risky startups. – Ellie Kesselman Nov 14 '13 at 2:57
  • Good question. It caught my attention due to the high level of interest that crowdfunding has generated in Silicon Valley and throughout the U.S.A., e.g. I even hear about it on CoastToCoast AM with George Noory radio broadcasts, repeatedly (which surprised me, a lot!) – Ellie Kesselman Nov 14 '13 at 6:39
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"I would suggest that we act quickly when there is a question that would plausibly break a variety of U.S. laws e.g. SEC, Internal Revenue Service, Federal Trade Commission."

Saying that an action breaks a law, or detailing the consequence of doing an action are both valid answers though.

That question was about detailing the consequences, where an upper middle class american user found the challenges to being an accredited investor to be arbitrarily out of reach, leading one to ponder more creative ways of qualifying. If the real answer was "this would create a fraudulent tax return, not worth it" and contained sources then the community will upvote that answer

( FWIW, accredited investor status at one point did rely on a financial literacy test instead of income. )

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  • When was that, when accredited investor status relied on a financial literacy test? Who drafted and administered the test? Was this prior to 1933? I am curious! – Ellie Kesselman Nov 20 '13 at 5:12
  • @FeralOink this was in the 1970s and early 1980s. The issue was that the financial literacy test was also too arbitrary and companies didn't know if they'd done enough to vet investors to avoid SEC scrutiny. So it was simplified to just income. – CQM Nov 20 '13 at 15:32
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    Breaking the law is not a "creative way of qualifying". You explicitly asked question whether or not you're going to be caught when defrauding the US government. Forget your own stupidity of actually putting that online for everyone to see - what about even more stupid people who'd think "Oh, CQM did it - I can too!", do you really want that on your conscience, however little of that you have? What would you say if on a forum dedicated to applied chemistry someone would ask how to manufacture a poison in his kitchen, because divorcing the wife is too troublesome? Where is that line for you? – littleadv Dec 11 '13 at 8:43
  • @littleadv "You explicitly asked question whether or not you're going to be caught when defrauding the US government." If you felt that way, then that should have been your answer with sources, why is that so hard for you on this subject. Question asking about consequences, post the consequences. – CQM Dec 11 '13 at 15:06
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    @CQM That's what I did, you didn't like someone telling you the consequences you didn't want to hear, so you downvoted and trashed my answer. As the result, I suggested a sterner policy on this forum against criminals like you. If you have an idea how to break the law - keep it to yourself next time. – littleadv Dec 11 '13 at 15:46
  • @littleadv thats not what happened. there are only 3 upvotes on your answer, and comments from me on it. It was generally well received before you deleted it – CQM Dec 11 '13 at 16:05

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