Private Placements & Exempt Offerings
Offerings excused from SEC registration: Regulation D private placements sold mainly to accredited investors, intrastate offerings under Rule 147, small offerings under Regulation A, and exempt securities such as Treasuries and municipals.
The exam’s favorite move is to separate an exempt security (always excused — Treasuries, munis, bank issues) from an exempt transaction (a particular sale is excused, but the security could still be sold publicly later). The classic trap: students assume an exemption means “no rules at all,” yet antifraud provisions always apply, and under Reg D the issuer must still file Form D with the SEC within 15 days of the first sale. Watch for Rule 506(c) stems that allow advertising — the tell is that the issuer must take reasonable steps to verify accredited status, not just take the buyer’s word.
Don’t confuse the exemption families: Rule 147 is the intrastate exemption (issuer and all purchasers in one state); Regulation A is a “mini-registration” with Tier 1 up to $20 million and Tier 2 up to $75 million in 12 months. Contrast this with prospectus-and-registration: a registered IPO needs a final prospectus and cooling-off period, while a private placement needs neither — and the SEC still neither approves nor guarantees either one. Hook: D for Discreet deals, A for Advertised mini-IPOs.
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