Under the exemption, an existing security holder could invest up to $15,000, which limits the investor’s potential loss. However, we recognize that retail investors can invest whatever amount they decide on the secondary market. For this reason, and because, in certain circumstances, an investment above $15,000 may be suitable for an existing retail security holder, the proposed exemption contemplates that an investor may invest more than $15,000 if they receive suitability advice from a registered investment dealer.

Another assumption underlying the proposed exemption is that being an existing security holder provides a form of investor protection. Being a security holder indicates that the investor has previously made an investment decision about the issuer. This suggests that the investor has some familiarity with the issuer, including its trading record and its continuous disclosure. Further, if an investor is an existing security holder, we may generally assume that the investor has at least some limited investing experience.