September 30, 2013 Comments (0) Blog, Securities Fraud

Dangers Advertising Unregistiered Securities

(Last Updated On: July 17, 2015)

On Monday Sept 23, 2013  a new rule went into effect that lifts the 80 year old ban on advertising for private placements or unregistered securities. Companies trying to raise capital through private securities offerings can now advertise directly to the general public via newspapers, Internet, and even tv commercials.

The new rule affects securities offered under Rule 506 of Regulation D. Rule 506 allows companies to raise capital through private securities offerings, such as hedge funds and limited partnerships, without having to register the offering with the Securities and Exchange Commission if certain requirements are met. The rule change will allow advertising to be directed at anyone, but as in the past, private placements can only be sold to accredited investors.

Nevertheless, investors need to be aware that the new rule could potentially expose them to fraudsters. Many officials are voicing their concern. According to Nevada Secretary of State, Ross Miller, “This rule change provided a new solicitation platform that is another avenue for swindlers to scam investors, so I urge investors to perform due diligence and thoroughly check the offerings before investing. ”

Moreover, investors need to take the time not only to research the private placement, but also the person selling the securities. Although private placements do not have to register with the SEC and turn over certain disclosure documents, they will have to file a Form Reg D. In addition, any private placement that chooses to advertise will also have to submit additional information such as the company’s website and types of advertising material they plan to use. Investors can find the above information by visiting the SEC website or calling their state securities regulator.

Here is a list of tips to help you identify securities fraud scams.

The White Law Group is investigating potential claims against broker dealers that misrepresented or inappropriately sold private placements to investors. If you believe you are a victim of securities fraud and would like to discuss your litigation options with an experienced securities attorney, please call The White Law Group at(312)238-9650 for a free consultation.

The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Boca Raton, Florida and Chicago, Illinois.

For more information on The White Law Group, visithttp://www.whitesecuritieslaw.com.

-->