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Frequently Asked Questions
about Securities
 
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View list of Frequently Asked Questions!

              

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Q:  What are the risks of investing in a private placement offering?  

 

Private placement offerings allow companies to raise money without having to comply with the registration requirements of a public offering.

Although private placement offerings may offer substantial returns, they may be high-risk investments that might not be easily resold to other investors on a secondary market. These type of private investments are only reserved for accredited investors (individuals or companies who have sufficient wealth to withstand a financial loss) and a limited number of sophisticated investors (individuals who have the experience and sufficient access to knowledge in order to make an informed decision).

 

Keep in mind that companies raising money through private placement offerings often have a limited operating history and typically have more modest revenue streams than larger, more established companies. Because private placement offerings are not reviewed by regulators, they should be carefully examined prior to investing. 


For more information, read an
investor advisory on private placement offerings issued by the North American Securities Adminstrators Association (NASAA).


The information provided on this website is not comprehensive, is not offered as legal advice, and is not a substitute for competent legal counsel.  The Securities Division provides this information to give you an overview of the topics discussed.   You should not rely on the accuracy of this information, but should carefully review all applicable statutes and regulations with the assistance of legal counsel.