What Is A Private Placement?

A Private Placement is a capital transaction between an issuer, the entity seeking to raise capital, and an investor, or group of investors. When discussing a private placement, its usually in the context of a private company raising capital; however, public companies will also seek to raise capital using a private placement. In the latter case, this type of transaction is known as a “PIPE,” which stands for private investment in a private entity.

Private placements fall under what is know as Regulation D, or Reg D of the Securities Act of 1933. Private placements are also sometimes called Reg D offering. Reg D is what provides for the registration exemption under the Securities Act requirement that any offer to sell securities must either: 1) be registered with the SEC, or 2) meet an exemption. The exemptions provided under Reg D are known as Rule 504, Rule 505 and Rule 506.

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Private Placement Market Opens Up With The JOBS Act

Issuing a Private Placement might get a little easier for small businesses seeking to raise debt or equity using a Private Placement. One of the big changes is the proposed elimination of the prohibition on advertising and general solicitation.

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The JOBS Act Opens The Private Placement Market

The President recently signed the Jumpstart Our Business Startups Act (known as the “JOBS Act“) with broad bipartisan support. The JOBS Act removes restrictions on solicitation and advertising for companies seeking to raise