Private placements are unregistered investments that do not trade on a stock exchange. They have many problematic features that make them an unsuitable investment for most investors. Most cannot easily be resold and are therefore highly illiquid. Private placements can also be highly risky because they are used to raise capital for young or even startup companies that have little or no track record. They traditionally pay high commissions to the brokerage firms that market their shares, thereby creating an incentive for abuse. There is typically little transparency regarding the underlying enterprise and a significant possibility for conflicts with the interests of investors. Private placements are issued pursuant to exacting state and federal rules which specify who can be a buyer. They are not suitable for small investors, and even the wealthy and/or sophisticated for whom they are designed must receive accurate information about the enterprise free from fraudulent omissions.
If you have been misled about a private placement you own, contact the attorneys at PCJ Law for a free, informative consultation at 901-820-4433.