Search Our Website:
The Securities and Exchange Commission recently decided on a new rule banning convicted felons and other so called “bad actors” from claiming an exemption under Regulation D, reported an article published by Private Equity Analyst.

The article titled, “True Confessions: SEC’s ‘Bad Actor’ Rule Shines Spotlight on PE Transgressions,” explains that if a firm commits a disqualifying event, which includes a felony or misdemeanor convictions related to certain securities laws, the firm will be banned from marketing funds under a Regulation D exemption for a period of five years and will require firms that have had such transgressions in the past five to 10 years to inform investors about their convictions before soliciting investments.

Shareholder Brian S. North told Private Equity Analyst that the new rule is putting a burden on firms that employ any placement agents to make sure that they don’t violate the new rule.

“They’ll obviously know the information about themselves, but they’ll also want to know about others involved in the offering,” North said. 

Read the article – “True Confessions: SEC’s ‘Bad Actor’ Rule Shines Spotlight on PE Transgressions” (Private Equity Analyst, Dow Jones, August 2013) Subscription required.