Northern Securities says 'average' investors should have better access to early stage investments

By Sheri Kasprzak

New York, Dec. 8 - Northern Securities Inc. said Thursday that it feels current securities legislation limits the access of average investors to early stage private placement investments.

The investment bank proposed at the IDA Task Force on Modernizing Securities Legislation in Canada that investors with a minimum of C$200,000 in liquid assets be allowed to participate in private placements if they do not invest more than 15% of their liquid assets in a single offering or 25% in a series of offerings.

Current securities law presumes investor sophistication, a statement from Northern said, based on income, net worth, assets or the amount invested.

Investors who participate in private placements must now have a minimum of C$150,000 or at least C$1 million in liquid assets or earn at least C$200,000 individually or C$300,000 jointly in income.

"Having money, earning money or having a certain net worth are not necessarily indicative of investor sophistication," said Vic Alboni, Northern Securities' chief executive officer, in a statement. "We need to get away from preconceived notions of the existence of investment know-how because of wealth or income and conversely the lack of investment know-how because of their absence. Instead, the focus should be based on whether an investor can sustain a complete loss of his investment."

Northern Securities is based in Toronto.

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