Is posting a PPM online behind a password protected website count as a general solicitation? Twist: Does it matter if unaccredited investors can obtain a password and register for such a website?

Is posting a PPM online behind a password protected website count as a general solicitation? Twist: Does it matter if unaccredited investors can obtain a password and register for such a website?

Preparing a Private Placement Memorandum(PPM) that provides full and fair disclosure of the material aspects of the offering is recommended when offering and selling a Regulation D investment.

General solicitation includes websites, blast emails, and social networking media that can be viewed or accessed by the public.  Thus, PPMs should not be made available on an uncontrolled basis through internet access.

If a PPM is posted on a website that is protected by a password to limit access to those persons with whom the issuer or its representatives “have a pre-existing personal relationship,” this communication will not be considered general solicitation.

See: http://www.wnj.com/files/Publication/a941cb2d-f6db-40da-9cb0-85b44f514c70/Presentation/PublicationAttachment/ba8ac6ec-6388-4a90-b2fa-cb6b5b30328d/FAQ_Regarding_the_Private_Placement_of_Securities_under_Regulation_D_Rule_506.pdf

However, it is important to be careful how you provide the PPM. You must keep careful track of potential investors that register for your website.You may lose exemption status if a PPM ends up in the hands of enough unintended unaccredited investors, because the post then may qualify as general solicitation. It is key to keep control of who sees and who can access and edit your offering materials.

See: https://www.thesecuritiesedge.com/2012/09/securities-law-101-part-ii-avoiding-the-pitfalls-in-a-private-placement/

For more information on posting your PPM online, call Bradshaw Law Group today. 

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