Companies and sponsors thinking of raising capital through a private offering should devote the time and resources necessary to understand and appreciate the importance of securities law compliance.  The private placement market has been badly bruised and beaten in recent years due to a combination of unfortunate events that led to massive investor losses, litigation, enforcement proceedings, broker-dealer closures and consolidations, negative publicity, and increased regulatory scrutiny and suspicion.

With capital still relatively scarce for many, Regulation D issuers and sponsors may be tempted to cut corners when it comes to securities compliance, but now is not the time to cut corners.  Instead, sponsors should reinforce their commitment to compliance, ethics, and best practices (such as the Real Estate Securities Association’s Regulation D Best Practices Guide, which is currently under review by various industry regulators).  Admittedly, there is a lot of gray area under the law, not to mention lots of misconceptions and noncompliance in the marketplace, but those sponsors who commit themselves to “running a race to the top” and doing things the right way will be much better positioned for success when the Regulation D marketplace turns the corner.

For a quick introduction to Regulation D private placements, visit