The problem here is that somebody has to pay the Fair Dice Association and generally it ends up being the Casino. It also generally pays better to be a dealer than a dice certifier, so certifiers are often weighing the possibility of future employment when inspecting the dice. Finally, the risk of repetitional harm has proven, in practice, ineffective at preventing malpractice.

This isn’t purely theoretical. It has happened repeated in recent history. Arthur Andersen signed off on obvious accounting fraud at Enron due to conflicts of interest. During the GFC, credit ratings companies graded low quality MBS derived securities as ‘triple A’ without bothering perform anything beyond a cursory examination.

Now imagine what would happen if every rando could start playing in the private markets. Well you don’t have to imagine too hard, we did a natural experiment not long ago with crypto currencies. What did we get? Shameless pump and dump schemes organised openly on social media, pyramid schemes, vapourware ICOs, and all manner of other dodgy dealings.

One reason these scams were so hard to stop was that so many unsophisticated scammers and scammees people were involved. The wealth requirement at least reduces the numbers of people involved to a somewhat manageable level. I do agree though, it’d be nice to have a more equitable way to do this. I think this action from the SEC is an important step towards that as it now opens the doors to qualified people that might otherwise fail the wealth test.