Companies that do not wish to raise money in an expensive public offering
registered with the SEC usually seek funds in a transaction exempt from registration, a "private
placement". Private placements are sales generally of restricted common stock, typically under
SEC Regulation D, which provides a safe harbor exemption from the registration requirements of
the Securities Act of 1933 ("1933 Act"). Regulation D sets forth rules governing three (3)
types of Private Placement offerings commonly known as a 504, 505 and 506 offering.
We can assist and guide you in compliance with the many rules and regulations
in conducting a Private Placement. These rules basically prohibit general solicitation or advertising
of the offering; limit the number of non-accredited investors; require that specific disclosures be made
to the participating investors; and place responsibility on the issuer and its agents to verify that the
investors solicited and accepted are qualified to participate
While exempt from registration requirements for the 1933 Act, a private placement offering
is not exempt from the fraud provisions of the 1933 Act and requires careful compliance with the relied upon exemption.
In addition, the offering and sale must comply with state securities laws ("blue sky laws"). An issuing company failing
to qualify for an exemption relied upon can face severe penalties and possible criminal repercussions. Securing
competent counsel is a very important step in conducting a private placement offering.