It’s not just to protect the investor, but also to protect those selling the investment. Generally these are non SEC regulated securities, so the disclosure and registration rules largely don’t apply. Investors are expected to do their own due dilligence. It provides a degree of protection to the vendor from accusations of miss-selling, or missleading or not fully informing the investor of risks.
SEC regulations are there to protect investors. If the rules for trading my nn regulated securities were dropped, then there would be much less reason for securities to go through the registration process, undermine my the whole regulatory system, but ncreasing risk for everyone including the country. After all these rules came out of the aftermath of the Great Depression.
Think of it on the same way as retail goods quality control standards. If you buy goods in a store they must comply with strict safety and quality controls, but if you’re a business or dealer those rules don’t apply, for extample if you’re buying the goods to scrap them, or bring them up to standard and then sell on. Different rules apply to retail purchasers and trade purchasers.
SEC regulations are there to protect investors. If the rules for trading my nn regulated securities were dropped, then there would be much less reason for securities to go through the registration process, undermine my the whole regulatory system, but ncreasing risk for everyone including the country. After all these rules came out of the aftermath of the Great Depression.
Think of it on the same way as retail goods quality control standards. If you buy goods in a store they must comply with strict safety and quality controls, but if you’re a business or dealer those rules don’t apply, for extample if you’re buying the goods to scrap them, or bring them up to standard and then sell on. Different rules apply to retail purchasers and trade purchasers.