Transcript REIT - North American Securities Administrators Association

Private Placements
Lindsay DeRosia
State of Michigan
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These views are my own views
and not necessarily those of
NASAA or the State of
Michigan
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Regulation D
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Regulation D covers 3 federal
securities exemptions:
• Rule 504
• Rule 505
• Rule 506
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17 CFR § 230.501 – 508
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Regulation D Breakdown
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§ 230.501: Definitions
§ 230.502: General (Integration /
Information)
§ 230.503: Form D Filing Information
§ 230.504 – 506: Specific Exemption
Details
§ 230.507: Disqualifying Provision
§230.508: Insignificant Deviations
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Securities Act of 1933
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§ 3(b) The Commission may from time to time by
its rules and regulations, and subject to such
terms and conditions as may be prescribed
therein, add any class of securities to the
securities exempted as provided in this section, if
it finds that the enforcement of this title with
respect to such securities is not necessary in the
public interest and for the protection of investors
by reason of the small amount involved or the
limited character of the public offering; but no
issue of securities shall be exempted under this
subsection where the aggregate amount at which
such issue is offered to the public exceeds
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$5,000,000.
Rule 504
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Based on §3(b) of the 33 Act
Offer and sale of up to $1,000,000 in
a 12 month period
Can sell to an unlimited number of
investors
General solicitation generally not
allowed*
Must file a Form D
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Rule 505
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Based on §3(b) of the 33 Act
Offer and sale of up to $5,000,000 in
a 12 month period
Can sell to an unlimited number of
accredited investors and up to 35
other persons
No general solicitation or advertising
Must file a Form D
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Rule 506
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Section 4(2) of the Securities Act
exempts from federal registration
“transactions by an issuer not
involving any public offering.”
Rule 506 was a Rule created to help
provide objective standards for when
an offering satisfied the 4(2)
exemption, and is therefore
considered a “safe harbor” for the
private offering exemption found in
4(2).
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Rule 506
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National Securities Markets
Improvement Act (“NSMIA”)
preempted state regulation of Rule
506 offerings, by classifying them as
“federally covered securities.”
States, however, do still retain
authority in regards to fraud and
notice filing requirements.
There is no offering dollar limit, so it
is a popular avenue.
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Rule 506
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Can raise an unlimited amount of
money
Can sell to an unlimited number of
accredited investors and up to 35
other purchasers
Cannot use general solicitation
Must file a Form D
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Accredited Investor
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See §230.501(a) for complete list:
• Any natural person whose individual net
worth, or joint net worth with that
person’s spouse, at the time of his
purchase exceeds $1,000,000
• Any natural person who had an
individual income in excess of $200,000
($300,000 with spouse)
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PPM
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Private Placement Memorandum
Specific disclosure requirements vary
amongst the exemptions, but
generally a Private Placement
Memorandum is utilized
Protects the issuer from future
charges of violating the antifraud
provisions of federal securities laws.
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http://www.sec.gov/edgar/searchedgar/companysearch.html
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For more information
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http://www.sec.gov/answers/regd.ht
m
NASAA
• Project Group
• Review Checklist
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Thank you!
Have a nice day J
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