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The Securities and Exchange Commission requires most securities to be registered with the SEC. Under Regulation D (Reg D), certain securities are exempt from registration. Such securities commonly are referred to as private placements. Reg D allows usually smaller companies to raise capital through the sale of equity or debt securities without having to register their securities. Such securities are to be sold only to accredited investors.
For legal advice and representation regarding Regulation D or private placements in U.S. investments, contact Dimond Kaplan & Rothstein, P.A. Our Miami private placement attorneys are ready to help you pursue and recover damages from fraud involving private placements and Regulation D securities. Our clients come to us from Miami, Ft. Lauderdale and other locations throughout Florida, as well as from California, Idaho, and other states and other countries. Call or e-mail us to schedule a consultation.
Who Qualifies as an Accredited Investor?
Under SEC rules, investors are accredited if they fall into one or more of the following categories:
- a bank, insurance company, registered investment company, business development company or small business investment company
- an employee benefit plan, within the meaning of ERISA, if a bank, insurance company or registered investment adviser makes the investment decisions, or if the plan has total assets in excess of $5 million
- a charitable organization, corporation or partnership with assets exceeding $5 million
- a director, executive officer or general partner of the company selling the securities
- a business in which all the equity owners are accredited investors
- a natural person who has individual net worth, or joint net worth with the person's spouse, that exceeds $1 million at the time of the purchase
- a natural person with income exceeding $200,000 in each of the two most recent years, or joint income with a spouse exceeding $300,000 for those years, and a reasonable expectation of the same income level in the current year
- a trust with assets in excess of $5 million, not formed to acquire the securities offered, whose purchases indicate sophistication
Unfortunately, stockbrokers and brokerage firms often sell private placements to investors who are not accredited. They often improperly solicit investors to buy Reg D securities offerings through mailers, newspaper ads, and seminars.Doing so can violate the exemption from registering the securities, and can subject the broker and brokerage firm to liability for selling unregistered securities.
In addition, sales of Regulation D securities are not exempt from the anti-fraud provisions of federal and state securities laws. Brokerage firms must conduct a reasonable investigation of the securities that they sell, even if the securities are exempt from registration. As part of their obligations, brokerage firms are required to meet FINRA's suitability requirement, which requires brokerage firms to investigate a security to determine whether it should be sold to any investor.
Notwithstanding their legal and regulatory duties, over the past several years, a number of brokerage firms sold billions of dollars in private placements that turned out to be fraudulent investments and Ponzi schemes. Investors have lost billions of dollars as a result. These investments include Medical Capital, Provident, Shale Royalties, DBSI and Striker.
Did you or your business lose out in fraudulent investment schemes? For legal advice and representation involving private placement and Regulation D securities, contact us.
Why Hire Our Law Firm?
Dimond Kaplan & Rothstein, P.A., has filed FINRA arbitration claims and class action lawsuits on behalf of hundreds of Medical Capital, Provident, Shale Royalties, DBSI and Striker investors in an effort to recover the investment losses. In those cases, our law firm has alleged that, among other things, the brokerage firms failed to conduct reasonable investigations of the private placement offerings, i.e., failed to conduct proper due diligence.
We also have alleged that there were numerous red flags that brokerage firms either failed to find or ignored, and that if the red flags had been recognized or heeded, the brokerage firms properly would have refused to recommend and sell the securities. Cases of this nature have been filed against brokerage firms such as: Securities America, NEXT Financial Group, Wedbush Morgan, QA3 Financial, Capital Financial Services, Milkie Ferguson, J.P. Turner, National Securities and First Allied Securities.
Contact the law offices of Dimond Kaplan & Rothstein, P.A., to discuss your securities fraud matter related to private placement and Regulation D with a Miami or West Palm Beach Regulation D Lawyer. Our private placement lawyers also represent investors in Southern California, New York, and throughout the United States and Latin America.