NASAA Warns Investors about Private Placements
The Enforcement Section of the North American Securities Administrators Association, the association of state securities regulators, warned investors about private placements in its list of “top financial products and practices that threaten to trap unwary investors and small business owners.” NASAA called Reg D or Rule 506 offerings as among “the most cited examples of fraudulent securities.” NASAA also criticized the JOBS Act for allowing general solicitation thereby “making it more difficult than ever for investors, and regulators, to ferret out abuses.” NASAA also cited other threats including binary options, stream-of-income investments, marijuana industry investment schemes, and oil and gas offerings.
OUR TAKE: Private fund sponsors should understand that they need to consider the state enforcement divisions in addition to the SEC and FINRA.