Private placements: The Form D Requirement

The SEC requires issuers of securities to file a Form D with the Commission within 15 days from the first sale of securities in certain types of exempt offerings.

If you are offering shares, membership participation, convertible debt, digital currencies, or other forms of investments connected to your company’s equity or performance, you are most likely considered an issuer of securities and therefore subject to state and federal securities laws. 

To put it more simply: if you are “raising money” for your venture, you are probably offering the securities of an “issuer” — your startup– and are therefore subject to securities regulations. This applies regardless of whether your venture is a tech company, an investment fund, a real estate project, a chain of stores, or any other kind of venture.

Your attorney should conduct a thorough analysis to determine if your offering involves securities, is exempt from SEC registration, and is subject to a Form D filing. Additionally, your attorney should review the offering itself in order to verify that any claimed exemption is being adequately applied, and that you have a clear understanding of rules concerning compensation of persons who are not registered broker-dealers.

The Form D requirement is often overlooked. In fact, this requirement is often unknown to participants — including attorneys!

Although Form D is relatively straightforward, its content is very specific to SEC regulations. The Form D notice addresses sensitive issues of securities law such as registration exemptions, investor accreditation, and finders’ fees. Moreover, the filing process itself can be complex for first time issuers: Form D must be filed on EDGAR (Electronic Data Gathering, Analysis and Retrieval) system of the SEC. Further, the company must have a Central Index Key (“CIK”) number in order to file.

Securities laws are complex and involve various legal and regulatory considerations. Contact our firm to speak with a securities law practitioner.