|Posted on July 2, 2017 at 6:40 PM||comments (0)|
What is the big deal about Rule 506(c? One of the most sweeping and deep changes in securities law in over 80 years occurred with the introductionof Rule 506(c. As long as you sell (not offer) to accredited investors, you may use the Internet and other public forums to market your offering anyway you want. A REIT recently raised over $40 million using Craigslist.com. With Rule 506(c, it is the wild-west. None of this means, however, that both state and Federal law prohibiting misleading statement or material omissions has changed. Securities offerings are more rigorously reviewed than most documents for securities violations. Innocent mistakes can be costly. Practice Note: One reason we recommend that our clients avoid unaccredited investors is because doing so requires you to include additional disclosures not necessary when all investors are accredited.
|Posted on June 3, 2017 at 11:05 PM||comments (0)|
List of FINRA Approved Reg CF Crowdfunding Portals
1. Wefunder 2. StartEngine 3. NextSeed 4. Indiegogo / MicroVentures (First Democracy VC) 5. SeedInvest 6. FlashFunders 7. Open Deal (Republic) 8. Crowdboarders 9. CrowdSourceFunded 10. DreamFunded Marketplace 11. Funding Wonder Crowd 12. GridShare 13. GrowthFountain Capital 14. IndieCrowdFunder 15. JumpStart Micro 16. Kasdaq (Mr. Crowd) 17. MinnowCFunding 18. NetCapital Funding Portal 19. Not So Small Change (Small Change) 20. Razitall 21. TruCrowd
|Posted on June 3, 2017 at 10:00 PM||comments (0)|
Exempt offerings or private placements are used to launch almost all alternative investments.
An alternative investment is any type of investment that falls outside conventional investment platforms such as stocks and bonds. These include real estate, commodities, and other asset-based investments. Alternative investments include many different asset classes with different risks and expectations of return.
Some alternative asset classes are more volatile and carry more risk; others are relatively safe. Asset-based lending is backed by collateral that can be redeemed in the event of a loan default. The success of these types of investments depends in part on due-diligence done on each opportunity. Alternative investments come with different types of risk, including liquidity. Alternative investments used to be restricted to hedge funds and other high earning investors. The 2012 JOBS act enabled almost anyone to offer these types of investments to accredited investors.
Access to these opportunities is now being democratized, with new access to non-accredited investors, and lower minimums and shorter investment durations. These opportunities typically have 1 to 3 year terms. Investment opportunities outside of the stock market have existed for decades. Alternative investment opportunities outside of hedge funds, such as private equity, managed futures, real estate, and asset-based lending are already established asset classes.
Many alternative investments are designed to protect from market volatility and alternative asset classes have shown different volatility patterns from the stock market, zagging when the stock market zigged. Because it is backed by tangible collateral, asset-based lending does not have a high correlation to the stock market, protecting an investor’s portfolio from market volatility.
|Posted on May 19, 2017 at 2:35 PM||comments (0)|
Questions we hear
Can I do multiple offerings on the same raise at the same time?
How do Blue Sky laws work?
What does “testing the waters” mean for a Reg A+ offering and why are some Reg A+ issuers declining to test the waters?
Do I have to be a broker dealer?
Do I have to use a broker dealer?
Do I need FINRA’s approval for a Regulation D offering?
Is there a limit on how many investors I can have?
What documentation is required for my type of offering?
What is a Reg CF offering?
For answers, see
Web site: http://privateplacementadvisors.com
|Posted on May 13, 2017 at 12:50 AM||comments (0)|
Unregistered Real Estate Exempt Offerings
Using our template for a general partnership with a specific purpose you do not need to pay and wait for Regulation D exemptions. Private Placement Advisors LLC employs a general partnership vehicle to avoid almost all review by regulators. With no limited partnership or other passive interest created, no security is formed. This particular template is designed for real estate lenders and borrowers. To learn more about the advantages of unregistered, non-exempt private placements, contact [email protected]
|Posted on May 4, 2017 at 5:05 PM||comments (0)|
Rule 506(c offerings must be sold only to accredited investors, whereas crowdfunding campaigns can accept money from non-accredited investors.
Remember, however, that 506(c offerings can still be marketed and advertised to anyone.
Another difference is that under Rule 506(c, funding sources must be verified as accredited investors using a third party service (such as Private Placement Advisors LLC).
Rule 506(c offerings have no limit on the capital raise, whereas crowdfunding raises are usually restricted to a $1 million.
The rules overseeing crowdfunding solicitation are much more restrictive than with 506(c offerings. General advertising is limited and specified disclosure has to occur at one or more online funding portals.
Is $1M enough for you, or do you need more? If you need more up front, you should go with the 506(c exemption. If your financial needs are $1M or less, consider a crowdfunding program appropriate for your company.
Do you assume you will not need non-accredited investors? Then go with 506(c.
If you believe your campaign is particularly attractive to a wider variety of investors, equity crowdfunding is for you.
|Posted on April 28, 2017 at 1:15 AM||comments (0)|
2016 saw a total of 23,292 Reg D offerings
The average offering size was $87.8 Million (offered not sold)
There were 307,764 total investors
The average number of investors per offering was 13.2
The banking industry had the largest total offerings in amount ($1.9 Trillion), number of offerings (7,083), and number of investors (115,536)
The travel industry had the smallest total offerings in amount ($484.2 Million), number of offerings (97), and investors (1,083)
|Posted on April 26, 2017 at 4:25 PM||comments (0)|
The president of the North American Securities Administrators Association (NASAA) said today that Trump’s proposed Financial CHOICE Act would dramatically change regulatory policies in the wrong direction, weaken the Dodd-Frank Act, and expose investors to significant new risks.
“It is clearly evident that the changes contemplated by the bill would significantly undermine and compromise the ability of regulators to effectively enforce financial laws and regulations,” said Mike Rothman, NASAA’s President.
“By attempting to eviscerate so many critically important reforms with weakened oversight of private securities markets and reforms, watered down provisions intended to expand fiduciary obligations to investment professionals, lowered standards for securities sold to the investing public, the legislation blithely aims to sweep away in one stroke scores of essential protections and modernizations to our financial regulatory architecture that were literally decades in the making,” Rothman said.
|Posted on April 22, 2017 at 12:45 AM||comments (0)|
Will Regulation A+ be a more popular choice for smaller companies than Regulation D?
Rule 506 of Regulation D is the most widely used capital raising exemptions under the US securities laws, largely due to its flexibility. Regulation A+ provides a new way for smaller companies to raise capital and get some liquidity in their securities. However, if a company is confident that it can raise money through the traditional Rule 506 private placement, it may still want to avoid the SEC review process, the hassle of Blue Sky compliance under Tier 1, and the ongoing reporting obligations of Tier 2.
There are two tiers for Regulation A+: Tier 1, for offerings up to $20 million in a 12-month period, with not more than $6 million in offers by selling security-holders that are affiliates of the issuer; and Tier 2, for offerings up to $50 million in a 12-month period, with not more than $15 million in offers by selling security-holders that are affiliates of the issuer. Although Rule 506 does not provide an opportunity for selling security holders to participate in the offering, it does not have any caps on the amounts that can be raised, and, while any company, public or private, US or foreign, can raise capital under Rule 506, under Regulation A+ only a US or Canadian issuer that is: a) not a reporting company under the Securities Exchange Act of 1934, b) not an investment company, and c) not a blank check company is considered an “eligible issuer.”
Still, in some instances, Regulation A+ appears to be more accommodating than Rule 506. For example, while Rule 506(b allows an unlimited number of accredited investors, it allows only 35 non-accredited investors. However, Tier 1 of Regulation A+ does not have any limitation on the number or type of investors, but Tier 2 imposes a per-investor cap for non-accredited investors of the aggregate purchase price to be paid by the purchaser for the securities to be no more than 10% of the greater of annual income or net worth for individual investors or revenue or net assets most recently completed fiscal year for entities.
|Posted on April 17, 2017 at 2:05 PM||comments (0)|
The North American Securities Administrators Association (NASAA) and the SEC have agreed that companies should be given more flexibility to engage in intrastate offers through websites and social media--without having to register their offering with the Federal government. Companies can now raise up to $5 million per year through the amended rules. The previous limit was $1 million. The rules are effective this month.
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