SEC Issues Investor Bulletin on Private Placement Investments

SEC Issues Investor Bulletin on Private Placement Investments 150 150 Rex Securities Law

September 24, 2014

THe U.S. Securities Exchange Commission (SEC) Office of Investor Education and Advocacy has issued an Investor Bulletin to help educate investors considering investing in private placements, which are securities that are not registered and also known as
“Reg. D Offerings”.

These investments, which typically pay high commissions to the brokerage firm,  (oil and gas partnerships are often sold in private placement offerings), are often touted as an exclusive opportunity and the security being offered may be stock, a limited partnership, an interest in a limited liability company, a note or a bond. The SEC warns:

“Keep in mind that private placements can be very risky and any investment may be difficulty, if not virtually impossible to sell.”

Most private placements may only be sold to Accredited Investors,  which is defined as a individual who:

  • has earned income that exceeded $200,000 ($300,000 if combined with spouse) in each of the last two years, and reasonably expects the same for the current year, OR
  • has a net worth of over $1 million, either alone or together with spouse. This net worth calculation excludes the value of the primary residence and any loans secured by the residence.

The Investor Alert contains much more detail about risk factors investors should take into account if considering a private placement investment.

Rex Securities Law provides nationwide representation to investors seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney.  Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.

Rex Securities Law

561 391 1900

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