> the problem is it makes it much easier for scammers.
The real problem is that the legal system isn't set up for a bunch of small investors to try to sue a company/officers doing genuinely fraudulent things.
If the stock is carved up over 100 people, it's very difficult to get unified action, so fraud tends to linger on.
There are lots of reasons that fraud can occur when you have lots of unsophisticated investors. The whole areas seems to be like vaccination - you get rid of a horrid disease by vaccination and once this happens everyone forgets about the disease and stops vaccinating only to then see the disease make a come back. Now that all the people with living memory of the 1920s and 1930s are dead we seem to want to repeat the experience.
I do think it would be great if we could find a way for everyone to participate in startups, but until we find a way to keep the scammers out then deregulation is not likely to end well for the unsophisticated investor.
The real problem is that the legal system isn't set up for a bunch of small investors to try to sue a company/officers doing genuinely fraudulent things.
If the stock is carved up over 100 people, it's very difficult to get unified action, so fraud tends to linger on.