As the Private Placement Memorandum Attorney I often get asked the question what is a security and am I offering a security? So to help clarify what is a security, let’s look at a couple of things.
suffice it to say that anytime you’re taking money from an investor in connection with your business venture, you’re likely selling a security.
(2) CONTROLLING LAW:
The law governing this area for most U.S. companies begins at the federal level. In general, all “securities” must be registered unless an applicable “exemption from registration” can be claimed. There are various statutory and rule-based exemptions that can apply to most common start-up or venture-based transactions depending upon how the securities are offered and to whom.
However, this needs to be carefully addressed as failure to strictly meet exemption requirements carries severe civil and possibly even criminal penalties. Not only do federal (SEC) rules and regulations need to be observed, but each state or jurisdiction In which a transaction occurs needs to be considered when you are either offering or selling a security. A transaction that may be exempt in one state may not be exempt in another. And state regulators are often much more aggressive in seeking sanctions than the SEC. Often overlapping exemptions are required in order to stay in the clear.
(3) OPTIONS FOR CONDUCTING SECURITIES OFFERINGS LEGALLY
As the Private Placement Memorandum Attorney I specialize in this area. My goal is to retain business by helping clients operate lawfully with out fear of being sued for lack of disclosure of risk to investors. I do this by either registering the securities offering or by preparing an offering in accordance with an exemption from registration – often utilizing a “private placement memorandum” (commonly referred to as a “PPM”).
To explore which path works for you, please contact me today. For more information about me : PPM Attorney
