Private Placement Investment Fraud Litigation And Arbitration Attorney, Russell L. Forkey, Esq.
This post sets forth the current (as of 6/4/11) definition of the phrase “purchaser representative,” as used in Regulation D of the Securities Act of 1933 (the “Act”). Please keep in mind that this information is being provided for educational purposes only. Thus, it should not be relied upon as legal advice. If you have any questions concerning this post, you should consult an experienced attorney.
As used in Regulation D, the term “purchaser representative” is defined as follows:
Purchaser representative means any person who satisfies all of the following conditions or who the issuer (the company in which you are investing) reasonably satisfies all of the following conditions:
- Is not an affiliate, director, officer or other employee of the issuer, or beneficial owner of 10 percent or more of any class of the equity securities or 10 percent or more of the equity interest in the issuer, except where the purchaser is:
- A relative of the purchaser representative by blood, marriage or adoption and not more remote than a first cousin
- A trust or estate in which the purchaser representative and any persons related to him as specified in paragraph (h)(1)(i) or (h)1(iii) of this section collectively have more than 50 percent of the beneficial interest (excluding contingent interest) or of which the purchaser representative serves as trustee, executor, or in any similar capacity
- A corporation or other organization of which the purchaser representative and any persons related to him as specified in paragraph (h)(1)(i) or (h)(1)(ii) of this section collectively are the beneficial owners of more than 50 percent of the equity securities (excluding directors’ qualifying shares) or equity interests
- Has such knowledge and experience in financial and business matters that he is capable of evaluating, alone or together with other purchaser representatives of the purchaser, or together with the purchaser, the merits and risks of the prospective investment
- Is acknowledged by the purchaser in writing, during the course of the transaction, to be his purchaser representative in connection with evaluating the merits and risks of the prospective investment
- Discloses to the purchaser in writing a reasonable time prior to the sale of securities to that purchaser any material relationship between himself or his affiliates and the issuer or its affiliates that then exists, that is mutually understood to be contemplated, or that has existed at any time during the previous two years, and any compensation received or to be received as a result of such relationship
If you elect to seek the assistance of a purchaser representative, be very careful who you choose. If the investment goes bad, this is just another road block that you need to overcome in attempting to recover your investment losses. Please think long and hard whether or not the proposed investment is right for you and your family, taking into consideration all the terms of the “offering memorandum,” including the disclosed risk factors. Before you invest in a “private” placement, we strongly urge you to review the investment with a qualified attorney.
With extensive courtroom, arbitration and mediation experience and an in-depth understanding of securities law, our firm provides all our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.