Experienced Private Placement Investment Lawyer
Learn Your Options When You Have Lost a Significant Amount of Money
The financial markets and securities industries are very complex. There are countless opportunities out there for every type of investor—from those who are less experienced to the most seasoned investors. And even sophisticated investors rely on the advice of their financial advisors and stockbrokers when deciding whether a particular investment is right for them.
But brokers and advisors don’t always prioritize their clients’ financial interests. Instead, for some of them, the focus is on generating high commissions for themselves. This is so even if it means defrauding investors in the process, which can be easier with private placement investments that are not subject to the same regulations and disclosures as registered securities.
Private placements can be lucrative for investors. But they aren’t suitable for everyone. If your broker suggested that you invest in private placements and you lost a significant amount of money, with the help of an investment loss lawyer you may be able to recover these losses in arbitration.
Get Help from an Investment Attorney for Your Private Placement Losses
In the financial industry, lack of disclosure often breeds fraud. Brokers and advisors who offer private placements are required to do their due diligence about these opportunities to make sure they are appropriate for the investors to whom they are recommended.
Financial Industry Regulatory Authority (FINRA) Notice to Members 10-22 sets forth these due diligence requirements for private placement securities. This notice says in part that brokers have an “obligation to conduct a reasonable investigation of the issuer and the securities they recommend” in private placements.
When brokers do not adhere to the requirements and investors lose money, brokers may be held accountable for fraud or negligence. Their brokerage firms may be liable for failing to supervise. Our private placements lawyer has extensive experience successfully taking on brokers, financial advisors and their firms that fraudulently or negligently cost investors money. Reach out for help today when you have sustained significant investment losses with a private placement security.
If You’ve Lost Money and Believe Fraud Was to Blame, Contact an Experienced Private Placements Lawyer for Help. Call the Wolper Law Firm today at 800.931.8452 to schedule a free consultation.
What is a Private Placement Investment?
Private placements are unique in that, like the name says, they are not offered publicly. These stocks or bonds are usually offered only to accredited investors and brokerage institutions, as opposed to the open market. Private placement securities do not have to be registered with the SEC and may also be referred to as unregistered securities. They do not have the same oversight as public securities and carry a higher risk along with the higher potential reward. However, because they are riskier, federal securities laws limit them to investors who are financially sophisticated and are able to sustain the risk of loss, and so they don’t need the protections of a public securities offering.
With that said, some private placements may be offered to limited numbers of non-accredited investors. When private placements are offered to non-accredited investors, those investors or their purchaser representative must have sufficient knowledge and experience in investing and financial matters to be able to evaluate the risks and merits of the opportunity. These investors must also receive disclosure documents and financial statements.
Types of Private Placement Investors
Some of the different types of investors who might participate in private placements include:
- Mutual funds
- Wealthy individual investors
- Pension funds
- Insurance companies
- Other financial institutions.
Private placements are often used as a way for startup businesses and other companies to raise capital instead of utilizing an initial public offering (IPO). This method of raising capital can have advantages for small businesses and other investors, but because the rewards may be greater, the risks are also higher.
Advantages and Disadvantages of Private Placement Investments
Private placements are an important part of the investment landscape, with unique risks and rewards, but they are not appropriate for every investor. Your broker or advisor should only recommend private placement securities that are suitable for your portfolio and investment goals.
Advantages of Private Placements
Private placement investments can be a great way for investors to maximize their returns. Your stockbroker may recommend private placements if the opportunity in question aligns with the goals outlined in your investment portfolio.
If you are considering investing in private placements, here are some advantages:
- Private placements do not need to be registered with the U.S. Securities and Exchange Commission (SEC)
- Private placements are lightly regulated
- Investors can demand a higher interest rate
- Young companies can remain private entities
- Private placements are usually only available to accredited investors.
Disadvantages of Private Placements
Even though private placements can make investors a lot of money, they also carry considerable risk. Some of the disadvantages of private placements are:
- Since private placements aren’t registered, you’re at a higher risk of being scammed.
- Investors get a higher interest rate, but no credit rating from the issuer.
- Financial information is not regularly disclosed.
- Investors aren’t given a prospectus.
- Private placement offerings are often illiquid.
This lack of financial information may enable investors to demand a higher interest rate, but it also means the investor is at a higher risk of not being repaid.
Legal Remedies for Private Placement Losses
If you have lost a significant sum of money on a private placement investment, you may be able to recover your money through a FINRA arbitration claim if your broker recommended an unsuitable investment or did not do their due diligence in investigating the issuer’s representation of the private placement offering. FINRA may also hold the broker and/or their firm accountable through fines, suspensions, and other penalties. Our private placements lawyer can advise you about taking your case to FINRA arbitration.
Arbitration is similar to going to court except that, rather than arguing your case before a judge or jury, your claim will be heard by arbitrators. These arbitrators are experienced in the securities and financial industries as compared to civil judges, who may not be familiar with the intricacies of private placement investments. Arbitration is also typically much faster than going to trial. While court cases can take years to be resolved, especially when appeals are filed, in FINRA arbitration the average case that is heard takes 16 months. If the decision by arbitrators goes in your favor, the broker/brokerage firm must pay you within 30 days.
Contact our firm at 800.931.8452 to learn more in a free consultation.
Examples of Specific Cases of Private Placement Investment Fraud
The following links describe specific cases of investment fraud in which brokers and advisors were held accountable. They are provided here to help highlight how rampant investment fraud is related to private placement offerings.
- Financial Advisor Ordered to Pay Approximately $4 Million in Restitution for Defrauding Investors in Private Placement Offerings
- Broker Suspended for Five Months for Allegedly Recommending Unsuitable Private Placement Securities
- Advisor Barred by FINRA for Allegedly Participating in Undisclosed and Unapproved Private Securities Transactions
- Advisor is Subject of $700,000 Customer Complaint Regarding Unsuitable Private Securities Transactions
- Broker Suspended and Fined by FINRA for Allegedly Engaging in Unapproved Private Securities Transaction
GPB Capital Holding Lawsuit
Another glaring case of a private placement investment opportunity that was wracked with fraud is GPB Capital Holdings. Dozens of brokers around the country sold funds totaling nearly $1.8 billion in what were claimed to be private equity opportunities and what turned out to be a giant Ponzi scheme. If you invested in GPB Capital Holding, contact Wolper Law Firm to arrange a consultation with a private placements lawyer. You may be able to recover your money through FINRA arbitration or a lawsuit. There are several class-action lawsuits and other actions being taken related to this Ponzi scheme.
Private Placement FAQs
Our Private Placement Investment Lawyer Answers Investor Questions
Private placements can be confusing, and investors may have many questions. Following are some of the common questions that our attorneys receive.
Startups that want to raise money may offer their shares to investors publicly or privately. IPO stands for “initial public offering.” When a company first goes public and offers its shares to investors, those shares are called IPOs. Private placement investments are non-public offerings. They are offered only to select investors.
Private placements can be an advantageous way for startups and other businesses to raise capital. They can provide higher returns than public offerings and, because they do not need to go through the registration process, funding is quicker and less costly. They also allow companies to maintain their privacy and to avoid disclosing financial information publicly, which is highly beneficial for some companies depending upon their goals and objectives.
Private placements are securities that are not registered with the SEC and are not offered publicly. They are generally available only to accredited investors. Private equity is a class of securities that does not trade on public exchanges. Private equity funds often pool the financial resources of investors to buy-out undervalued or underperforming companies. As with other forms of alternative investments, private equity securities carry high risk. Contact a private equity loss lawyer if you lost money and believe it was due to fraud or negligence.
Accredited investors include banks, mutual funds, insurance companies and other entities that are allowed to trade unregistered securities. The thinking is that these entities have the professional investment knowledge and financial wherewithal to understand how these securities work and to absorb losses with these riskier investments.
High-income individuals can also be considered accredited investors if they:
- Have earned at least $200,000 annually (or $300,000 together with a spouse) for the two previous years, and reasonably expect the same earnings for the current year, or
- If they have a net worth of over $1 million, either alone or together with a spouse (excluding the value of their permanent residence).
Unfortunately, however, even accredited investors can be victims of fraud and negligence on the part of brokers and brokerage firms. If you have lost significant money on a private placement or private equity investment, our attorneys are here to help you pursue recovery.
Our attorneys can help you when you have legal questions about private placement and private equity investments and your rights. If you need help recovering money because your broker did not do his or her due diligence, our private placements lawyer can advise you about filing an arbitration claim or another possible legal remedy. Call Wolper Law Firm today at 800.931.8452.
Why Choose Our Private Placement Investment Lawyer?
We Recover In Over 99% of Cases We Handle.
Private placement and private equity investments are complicated. Sometimes even the brokers and financial advisors you rely on to advise you about investment opportunities don’t fully understand how these complex securities offerings work. They may neglect to do their due diligence in investigating the issuer, or they may recommend investments that are unsuitable for your goals and your portfolio. Our attorneys thoroughly understand the laws surrounding private placements and the financial industry, which is why you can trust us to provide top-quality, effective representation. We have recovered money for wronged investors in over 99% of cases we have handled. Additionally, we . . .
- Exclusively represent investors who have been victims of fraud and negligence by brokers, advisors, and their firms
- Have years of experience defending the very brokerage firms we now take to arbitration and court on behalf of investors, giving us unique insight into how financial professionals think and operate
- Deliver personalized, communicative service and are available to clients seven days a week
- Work hard to maximize case value and get outstanding results for wronged investors.
Get Help from an Experienced Private Placements Lawyer
Did you invest in private placements or private equity funds on your broker’s recommendation? Did you suffer large losses due to bad investment advice or because your broker put their own interests before your interests? Get help from an experienced investment loss lawyer at Wolper Law Firm to discuss your options for financial recovery. Call our law firm at 800.931.8452.
Arrange a free consultation with a skilled private placement investment lawyer and private equity loss lawyer. Our attorneys at Wolper Law Firm represent both accredited and non-accredited investors in claims related to private placement and private equity losses. We can be reached seven days a week. Our business is to help you recover your investment losses.