Irvine, CA--The Securities and Exchange Commission has proposed to raise its "accredited investor" wealth requirement--which is necessary to invest in hedge funds, private equity, and other investments--from $1 million net worth to $2.5 million.

"This is exactly the wrong course of action," said Alex Epstein, a junior fellow at the Ayn Rand Institute. "This paternalistic wealth requirement should be abolished outright.

"By what right does the SEC tell someone with a net worth of $500,000 or $5,000 how he may invest his money? The rationale is that hedge funds are extremely risky, and thus only the very wealthy may be permitted to dabble in them.

"This is wrong on two counts. It unjustly maligns hedge fund managers, many of whom are some of the country's best and most responsible investors. And it treats the non-wealthy among us as a bunch of mindless dupes who need to be protected from snake oil--at the price of our freedom to judge risks and benefits for ourselves. The fact that some people will invest irresponsibly is no justification for violating the rights of all."

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Alex Epstein was a writer and a fellow on staff at ARI between 2004 and 2011.