According to canadiansecuritieslaw.com the Financial Industry Regulatory Authority (FINRA) recently “published proposed amendments to its rules that would require its members and associated persons that offer or sell private placements, as well as those that participate in the preparation of private placement memoranda, term sheets or other related disclosure documents in connection with a private placement, to provide disclosure to investors regarding the anticipated use of the offering proceeds prior to sale.”
These disclosures would provide the investor with a wealth of information about where their money was headed. The information would “include information regarding the amount and type of offering expenses, as well as the amount and type of compensation provided to sponsors, consultants and members in connection with the offering.”
The documents providing this information would have to be provided to FINRA within 15 days of the first sale. Even with the proposed changes, some offerings would not have to follow these new regulations. These exceptions to the rule would appear to be for private placements being offered exclusively to qualified purchasers or qualified institutional buyers.
FINRA’s goal for these proposed rule changes is to protect investors. FINRA was quoted as stating that the changes would, “provide important investor protections in connection with private placements without unduly restricting capital formation through the private placement offering process” and further helping to “identify problematic terms and conditions in private placements, thereby helping to detect and prevent fraud in connection with private placements.”
If you are concerned about an investment you made in a private placement or have questions about FINRA rules and would like to speak to a securities attorney please call our Chicago office at 312-238-9650.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Boca Raton, Florida.
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