How Would You Like a Rich Person’s Job?

In Essays on January 31, 2012 at 8:07 pm

By Robert Clark Young

Do you want to hear the truth about status, wealth, and work in America? The plutocrats really do own the government and the markets, and the rich really are exploiting the rest of us. You probably already know this. But did you know that, according to the law, exploiting us is their job?

I found this out when I tried to play in their private casino.

Since 2008, when my parents both had serious strokes, I have worked full-time and without pay as their caregiver. I also contribute to their financial support. Because caring for them is expensive, I’m always looking for ways to increase my income, so that my parents can continue to live in dignity and freedom in their own home.

A few weeks ago, I read an article about Facebook going public in 2012. This is the most anticipated IPO—initial public offering—of the year, a brilliant star outside the black hole of current market pessimism.

I also learned that some people were already buying and selling Facebook shares—before the IPO. These shares were coming from Facebook employees. The company has compensated some workers with equity, while other employees have been allowed to buy shares for as little as $6.

According to many analysts, the stock was good for a quick pop at the IPO. I decided that I, too, would like to own some Facebook stock before it went public. Well, wouldn’t you?

Two of the exchanges that deal in privately held companies are SecondMarket and SharesPost. I found their websites and entered my contact information.

A week later, a broker from SharesPost called me. I was at Wal-Mart, looking for a deal on adult diapers, but I angled my words into my cellphone as though I were an old market pro: “I’m interested in picking up some Facebook stock before the IPO.”

“That sounds like a great move. Can I ask you a few questions first to determine if you’re an accredited investor?”

“An accredited investor? What’s that?”

“Do you have assets totaling at least one million dollars, or, if single, a yearly income of at least $200,000, or $300,000 if married?”


“Then you won’t be allowed to trade with us, Mr. Young. Those are the SEC rules.”

“Really? Why do they have rules like that?”

Here the broker, thrown off script, hesitated. “Well—for two reasons, really. One, the SEC wants to make sure investors can afford a loss, since, as you probably already know, markets can go up or down. And two, accredited investors are more—well, we like to think, sophisticated about the market. They’re easier for us to work with. They’re more likely to think of investing as their job, as their work.”

“Investing isn’t my work,” I said, “but I thought anybody in this country was allowed to buy and sell stock, no matter how rich you are.”

He laughed. “I think you have the wrong country.”

We thanked each other and hung up.

I was shocked. Back in 1996, when my broker got me into an airline stock that quickly erased $20,000 from my portfolio, I don’t remember the federal government stepping in to make sure I could afford the loss, even though it represented more than half my yearly salary as a college English instructor. On that occasion, the SEC had remained completely silent about my lack of market sophistication.

I also knew that if I bought Facebook at the IPO, the SEC wouldn’t care if my shares plunged 50% in the first month. Under those circumstances, nobody in the government would be interested in “protecting” me by yanking the stock certificates out of my hands.

So the rules about “accredited investors” must exist for other purposes. What could they be?

First, I wanted to find out if the law actually creates a special class of investor, a person who is somehow better than the rest of us, a wealthy citizen whose “work” it is to fatten his portfolio with hot stocks before the general public is allowed to own them. Had the government in fact established such a category of “accredited investors”?

It was a lot of dry reading, I can tell you. But I eventually found SEC Rule 501, Regulation D, paragraph 6. An “accredited investor” is “a natural person who has individual net worth, or joint net worth with the person’s spouse, that exceeds $1 million.”

So it was true.

But remember, this is America. It would be unfair, undemocratic, and against our most deeply held beliefs to limit this game to millionaires. And so paragraph 7 expands the American spirit of opportunity to “a natural person with income exceeding $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000.”

The boys at the SEC could not be more explicit if they were to write, “There are opportunities and benefits that shall be available only to the rich.”

I was balancing my checkbook when my girlfriend asked, “How’s the Facebook deal going?”

“It’s against the law for me to buy any. I have to wait till the IPO.”

“But you said some people were already buying and selling shares.”

“Yeah. You have to be literally a millionaire or a very high income person to do it.”

“Oh, come on.”

“Seriously. I talked to a broker and I looked it up. It’s the law. I guess these rich bastards bought some politicians to get it passed. The government lets them buy up shares of privately held companies super cheaply. Then, when the IPO rolls around, these guys turn around and dump the shares on the hoi polloi at inflated prices. I guess it’s one of the secret ways the rich keep getting richer.”

“Are you kidding me? What’s the justification for a thing like that?”

“The government considers that investing is a rich person’s work.”

“You mean, it’s their job to screw us?”

“You have to admit, they have all the qualifications.”

As I sat there thumbing through my bills, I thought of how wonderful it must feel to be a U.S. government-approved wealthy person, how personally fulfilling it must be to do the “work” that only the rich are qualified to do.

It’s a private casino, with the numbered wheels and the spinning cherries and the tumbling dice all weighted against us, those of us in the bottom 99%.

But why question it? We are, after all, “a nation of laws, not of men.”

Robert Clark Young has written for the Washington Post, San Francisco Chronicle, New York Press, and for many of the leading literary journals in the country. He is seeking a publisher for his new book, THE SURVIVOR: How to Deal with Your Aging Parents, While Enriching Your Own Life. Visit his other work here

Photo provided by Robert Clark Young.

  1. Wow. Speechless. I shouldn’t be surprised at this, but…..

  2. Wow – this should be front page news. Or at the very least, high profile syndicated column news.

    • Why would it be? It’s not news by any definition. Good luck getting the Fourth Estate to report on anything that doesn’t benefit the other three.

  3. This isn’t news. The rules and regulations regarding accredited investors are there to protect the public from scams, fraud and market risk that they are unable to bear. The standards and scrutiny that a public offering must endure are designed to protect people who aren’t professional investors. You can participate in some of these private offerings through other instruments, like mutual and hedge funds. Again, not news.

  4. […] Robert Clark Young A writer who is currently working as full-time caretaker to his elderly parents seeks to augment his income—by trying to buy pre-IPO Facebook stock. […]

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