Wall Street's industry-funded regulator issued a new investor alert in the lead up to Monday's lifting of the general-solicitation ban on private-placement investments.
The alert, ( “Private Placements — Evaluate the Risks Before Placing Them in Your Portfolio,” ) cautions that investing in private placements, or an offering of a company's securities that is not registered with the Securities and Exchange Commission, is “risky and can tie up your money for a long time.”
The general-solicitation ban for private placements, eradicated by a statute in the Jumpstart Our Business Startups Act, was part of a regime that kept unregistered equity offerings out of reach of the inexperienced investor, with only “accredited investors” allowed to invest unless a company was granted an exemption.
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“For companies to be eligible for that exemption, they had to limit the type of investors they were soliciting,” said Gerri Walsh, senior vice president for investor education for the
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