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Investor Education

Private Placements

Private placement offerings are securities offerings not required by law to be registered with federal or state securities regulators, according to the U.S. Securities and Exchange Commission’s Rule 506 of Regulation D. Private offerings are not reviewed by regulators and, as a result, there is an increased potential for fraud.

Private placements allow companies to sell stocks, bonds or other securities to investors without completing the rigorous disclosures necessary in a registered offering. Businesses raising capital through private placement offerings often have limited operating histories and frequently have modest revenues compared to larger public companies. They are not required to provide as much information to investors as public companies are required to provide under federal securities laws.

The resources below provide an overview of private placement offerings and the risks associated with these offerings.

Wisconsin Department of Financial Institutions (DFI)

Financial Industry Regulatory Authority (FINRA)

North American Securities Administrators Association (NASAA)