Lotteries, mortgages, and public securities are heavily regulated to make it nearly impossible to get ripped off. You can lose your life savings by buying AAPL, but you can't lose it
despite AAPL going up because you didn't read the fine print on the brokerage website.
The reason for accredited investor requirements is that it's not realistic to do the same with small businesses. It is perfectly legal, and not totally uncommon, for startups to have very unfavorable terms for investors. If the LLC paperwork says the majority partner can choose to buy back your shares against your will for a dollar any time they like, then they can, and it's your fault for not reading it more carefully.
I've heard of many cases, and personally witnessed one case, in which an accredited investor put a lot of money in to a startup, and lost it even though the startup did well. The requirements may not be perfect, but I don't think it's fair to suggest they don't serve a purpose.
The reason for accredited investor requirements is that it's not realistic to do the same with small businesses. It is perfectly legal, and not totally uncommon, for startups to have very unfavorable terms for investors. If the LLC paperwork says the majority partner can choose to buy back your shares against your will for a dollar any time they like, then they can, and it's your fault for not reading it more carefully.
I've heard of many cases, and personally witnessed one case, in which an accredited investor put a lot of money in to a startup, and lost it even though the startup did well. The requirements may not be perfect, but I don't think it's fair to suggest they don't serve a purpose.