Private Placements

Accredited Investors.net Intro

Hi everybody. My name is John Fischer. Welcome to acreditedinvestors.net. You may recognize me. I own Salesleads.tv. You’ve probably seen my website. I have a lot of other web sites as well. So don’t be surprised if you use the keyword: accredited investor and I pop in a lot of places.

Let’s talk about what we do. We’ve been doing this for 25 years by the way – A+ rating with the BBB – no complaints – 25 years. And there’s a reason for it. We take care of any problems that we have: disconnects, wrong numbers. If there’s a problem we fix it. It’s pretty easy to do. The reason we do so well, the reason we’re so successful is our model is different than most other lead brokers. Although we have the Village Bike – that $.50 lead that everybody and their mother has. And the only reason we keep them is because some people have big dialers. Some people have young people, new brokers. They don’t want to waste money on the new brokers and they kind of let them sharpen their teeth on that stuff. I mean I’m not saying they don’t produce but you’ve got to make 100 phone calls to get one guy that you have a decent conversation with. It’s a waste of time. The Village Bike – the $.50 lead – we don’t like it.

Now what we specialize in is the PP Crema. The PP Crema is $2.00 apiece. The PP stands for Private Placement. The Crema is the cream of the crop. And we’ve got the PP Crema, the Gold, the PP Crema Real for real estate, the Platinum, Titanium, Cush. We give them different names. So each follows a different database that we bought from a broker dealer. And what we do is we actually give them their code names: PP, Crema, whatever it is.

I’ve got about 65,000 of them. I just picked up 2,000 last December – very strong leads – maybe 75,000 altogether. For $5.00 apiece the absolute best lead in the country but it’s a double-edged sword. The Big Dogs – They’re sophisticated. You can’t put them in the dialer. You can’t give them to an unsophisticated broker or some guy who doesn’t know what he’s doing. They’ll eat him up for dinner. But if you’re looking for that guy that could go $250,000.00 per unit they’re coming from a Master Private Placement where they could only accept $250,000.00 and a $5,000,000 net worth.

That’s the rule for hedge funds and Master Private Placements. I picked up 2,000 of them in the last 120 days and that’s a super, super lead – the best in the country. And again I’m the only guy that has them. There’s a woman out in California who says she has them. It’s some kind of a gambling list – crap. A guy in Florida; he’s got the Big Dogs. He’s just using the Big Dog name but it’s all crap. We – Salesleads.tv and accreditedinvestors.net – We’re the only ones that have the Big Dogs.

If you have any questions give me a call: 561-239-0364. My name is John Fischer. Have a beautiful day and God bless

Regulation D: Accredited Investors Only?

Registering with the Securities and Exchange Commission (SEC) often takes a lot of time and money that small businesses cannot afford to lose. Regulation D offers exemptions that let companies sell securities to accredited and non-accredited investors without going through the hassle of SEC registration. Before using Regulation D exemption rules, it is important to understand how they could affect your business.

The Basics of Regulation D

According to the Securities Act of 1933, individuals and businesses that sell securities have to either register with the SEC or meet an exemption. Regulation D outlines three rules that investors can use to avoid registration requirements. This lets qualifying companies sell securities without registering with the SEC. Companies that want to take advantage of Regulation D exemptions, however, must file the appropriate forms to ensure they are following rules and enter their information in the SEC’s Electronic Data Gathering, Analysis, and Retrieval (EDGAR) database.

The Three Exemption Rules of Regulation D

Regulation D has three rules that can exempt companies from SEC registration.

Rule 504

Rule 504 is useful for companies that only plan to sell $1,000,000 of securities within a 12-month period. Companies that meet this requirement can have as many investors as they want. They can also pay commissions and resale securities.

Rule 505

Rule 505 is useful for companies that sell $5,000,000 or less within a 12-month period. Companies that choose this exemption may sell securities to no more than 35 non-accredited investors. They can, however, sell to an unlimited number of Reg D accredited investors.

Rule 506

Rule 506 does not enforce financial limitations. Companies can, therefore, sell any amount of securities to investors. Like those using Rule 505 for exemption, companies using Rule 506 can only have up to 35 non-accredited investors. They can have an unlimited number of Regulation D accredited investors.

Rule 506 gives companies a little more responsibility when choosing investors. While they can sell to non-accredited investors, they must make sure that each investor meets a sophistication standard. The individual investor may meet this standard on his or her own, or by working in conjunction with a Purchaser Representative who understands the industry well.

Important Differences Between Reg D Exemption Rules

Financial restrictions are the most obvious differences between these three rules. If a company wants to sell more than $1,000,000 in securities, then it cannot claim the 504 exemption. 504, however, does let the company sell to an unlimited number of accredited investor Regulation D and non-accredited investors. The looser regulation makes sense within the industry because the company is working with relatively small amounts of money.

Rule 505 restricts security sales to $5,000,000 or less. It also prevents companies from using general solicitation and advertising to attract investors.

Rule 506 differentiates itself from 504 and 505 in two important ways. First, it doesn’t restrict the amount of securities that companies can sell. Second, it lets companies use general solicitation and advertising to attract investors. Rule 506 prevented general solicitation until the JOBS Act of 2012. According to Forces writer Cheryl Conner, this change to the Reg D program could add a trillion dollars of new funding to the industry.

Finding and Approaching Investors Without Breaking Reg D Rules

The exemption rule that a company uses can significantly influence how they find and approach investors. Any company that gets an exemption from Rule 504 or 505 will need to find investors privately without using an advertisement or anything that could be construed as general solicitation. That means they cannot advertise in newspapers, billboards, the Internet, or any other public forum.  

Companies that claim an exemption under Rule 506, however, can attract investors via any of these methods.

They can purchase a list of investors; create websites to collect leads; make billboards advertising their investment options; air commercials on TV; or use any number of advertising strategies that might attract more investors.

Once a potential investor contacts the company about buying securities, though, the company must make sure that the investor has a sophisticated understanding of the industry. This creates a kind of self-regulation that makes it harder for unscrupulous companies to take advantage of investors who don’t understand the risks and options when buying securities.

Reg D exemptions are extremely helpful to companies that want to sell securities. The exemption that you take should depend on your business’s specific needs.

Accredited Investor Qualifications

Will the SEC Change the Accredited Investor Qualifications?

The SEC sets the accredited investor qualifications criteria and hasn’t made changes to the income qualification since 1982. In order for an investor to be considered accredited, they need to make $200,000 a year as an individual or $300,000 with their spouse. They need to have met the income standard for the past two years and be likely to do so again in the current year.

Inflation

When inflation is taken into account, a person making $200,000 a year in 1982 will need to make $495,000 a year in 2014 in order to have the same purchasing power. This uses a calculation of 2.88 percent inflation per year with a total inflation of 147.92 percent from 1982 to 2014. The average income growth rate in the United States has kept pace at 4.13 percent while currently only at 1.58 percent. Given these statistics, now would not be a good time for the SEC to raise the income criteria for an accredited investor. If the adjustments had been made during a period of economic growth, it may have made more sense. Currently, however, the average citizen is just recovering from a period of negative wage gains and seeing some stabilization.

If the SEC does move forward in raising the minimum income requirements

This is an important topic of discussion because if the SEC does move forward in raising the minimum income requirements, the number of accredited investors would significantly decrease which would further restrict access to capital. The U.S. economy has started showing signs of growth but with current global unrest and wage growth of only 1.58 percent nationally, consumer confidence is still low. This is already creating a situation where some investors are sitting on the fence. Eliminating others will only make the economy worst by making it more difficult for businesses to raise money for expansion which in turn creates new jobs.

What it means to be an “Accredited Investor”

The last time the SEC changed the definition of what it means to be an accredited investor was in 2011. In January of 2011, the SEC announced they were considering making changes to the net worth standards so that a primary residence could not be included in someone’s net worth. In December of that year, the new guidelines were finalized. It took almost a full year for the process to complete but once done, accredited investors could no longer use the positive equity in their home to help them qualify. This eliminated many investors that had been counting on home equity to increase their overall net worth. Home equity was also a standard addition when applying for loans and meeting various banking criteria. While fairly standard, the SEC felt it was a necessary measure after the housing market collapsed.

If the SEC follows through with changing the income criteria for an accredited investor, it may not be done until the middle of next year. This is following the timeline of how long it took for their last revision to be completed. Companies should be aware that this is on the horizon and create their private placement now so that money can be raised before the pool of potential investors shrinks. For a list of accredited investors visit www.SalesLeads.tv or www.AccreditedInvestors.net.

What is a Reg D Accredited Investor?

If you are looking to raise money or sell investments, it is important to know what a Reg D Accredited Investor is and how to find them. This is a select group of individuals with a high-income earning and a high net worth. You can’t tell who is accredited simply by looking at them. Rather, there are set guidelines that have been created by the SEC as to who can be considered accredited.

Guidelines for Being a Reg D Accredited Investor

The SEC has created these guidelines, and each investor must pass them continuously in order to be accredited. Just because someone was accredited in the past, does not mean they are today.

1) They have made $200,000 or more as an individual over the past two years and are likely to do so again in the current year, or they make $300,000 a year combined with their spouse and are likely to do so again OR

2) They have a net worth of $1 million or more, excluding their primary residence.

The income calculation is fairly simplistic except for individuals that own a business. Many business owners make this amount of money but by deducting things like depreciation and amortization, their tax returns do not indicate this level of income. The net worth qualification is fairly straightforward with one exception. If someone owes more money than their house is worth, the negative equity needs to be deducted from their total net worth. This does not apply to positive equity.

Becoming Certified as a Reg D Accredited Investor

Most investors self-certify, meaning that they sign a document stating how much they make or what their net worth is and sign it. This works perfectly well when companies are raising money using Reg D Rule 504, 505, or 505b. If, however, the company is raising funds using Reg D Rule 506c, a third party must provide the certification after reviewing financial documents. This can be a member of the company, an attorney, licensed broker-dealer, or CPA.

Why Working with a Reg D Accredited Investor is Smart

These investors are more likely to have disposable income to invest. Their income is high and has been so for a period of time, or they have significant assets already, sometimes both. This makes them the ideal prospect for investing in private placements, starting a brokerage account, buying property, etc.

Finding Investors

If you are looking to work with accredited investors, you will need help finding them. Unlike traditional sales leads, these leads must be qualified and full of people that meet the SEC standards. They are difficult to locate and can take years of networking in order to build a solid lead base. Fortunately, you can purchase a lead list of accredited investors from both www.salesleads.tv and www.accreditedinvestorleads.com. This enables you to spend the majority of your time pitching deals and walking people through closing, rather than wasting time looking for names and phone numbers.

Accredited Investor Lists Help Raise Money

An Accredited Investor List Can Help You to Raise Money

If you are raising capital, an accredited investor list can help you to reach more investors that are qualified and able to put money into your deal. When raising money using a Reg D offering, it is important to work with accredited investors to stay in compliance with the SEC. The challenge is that there is no way to tell if someone meets the qualification standards when you meet them. A list will help to save you time by sending you directly to the people that meet the SEC standards.

The SEC has set criteria for what makes a person an accredited investor. This includes:

Income. The investor needs to make $200,000 a year by themselves for the past two years or $300,000 per year with their spouse. They must also believe that their income will continue at that level or greater.

Assets. An investor may qualify if their net worth is over $1 million, excluding their primary residence. In order to calculate net worth, review their assets and liabilities. Once their debts, minus their first mortgage, have been deducted from their total assets you get their net worth.

Even when people have good jobs and a big house, they may fall short of the SEC’s standards for what makes an accredited investor. This is why purchasing an accredited investor list can save you a lot of time. You won’t have to wonder or guess if someone meets the criteria. All you need to do is pick up the phone and start calling.

The accredited investor list can be broken down by several areas including demographics, geographic location, and even industry niche. For example, you can purchase oil and gas leads to raise money for a private placement in that industry. The more you narrow down your lead list; the better your chances of success are. This means you will spend less time on research and trying to make connections and more time actually pitching your deal.

You can purchase an accredited investor list from either www.salesleads.tv or www.accreditedinvestorleads.com. When speaking with a representative let them know if you are looking for leads in a certain geographic area or any other qualifiers you need.

Before you call, make sure that your private placement is ready to go. It should be prepared in compliance with Regulation D and include an executive summary, financial information, a business plan, market analysis, competitive analysis, information on leaders and a term sheet. Be sure also to include disclosures and risk factors. It is impossible for every deal to go exactly as planned and market conditions can change with the wind so leaving out risk factors is unwise. When making calls, your pitch should be a summarized version of what is in your private placement. Give enough information for them to want to learn more, but not too much to bore them or give an information overload. Keep track of everyone you speak with and who gets copies of your private placement. Follow up with your accredited investor list and start to raise capital.

Help to Reach More Investors

Now is an excellent time to raise capital using a Reg D private offering.

The SEC has created Regulation D Rule 506c which lifts the ban on general solicitation and enables companies to reach more investors. This creates an opportunity to reach an additional group of investors, yet they still need to be accredited. Private placement leads are accredited investors, the exact group of people that can participate in your private offering.

It can be challenging to locate private placement leads unless you purchase a leads list.

You can buy one from www.salesleads.tv or www.accreditedinvestorleadscom. These lists will include people that have made either $200,000 individually or $300,000 jointly with their spouse over the past two years and are likely to do so again in the current year. Those that don’t meet the income requirements may be included if their net worth, excluding their primary residence, is over $1 million. Companies armed with a private placement lead list can confidently reach out to investors without worrying about violating general solicitation rules.

Regulation D Rule 506c lifted the ban on general solicitation, but it may not be the best offering type for every company.

It enables advertising of an offering to the general public, so long as only accredited investors actually participate in the offering. Companies that have local, non-accredited investors that want to participate cannot use this offering type. For example, if your business banker, lawyer, or CPA want to participate but do not meet the income requirements, they can under Rule 506b. This enables companies to raise capital from people in their sphere of influence then target accredited investors for the remaining capital raise.

Taking Private Placement Leads into Consideration

When using Regulation D Rule 504 or Rule 505, it is also important to obtain private placement leads to call on. These rules do not allow for advertising or general solicitation so companies that call on non-accredited investors can be in violation and lose their exemption if they start calling or marketing to them. A scrubbed list is extremely important for avoiding these types of incidents.

Companies can also locate accredited investors by establishing a referral base with local professionals. People like lawyers, CPA’s, bankers, and investment reps are excellent sources of leads. They work with people that have a higher net worth on a daily basis and may be aware of who is looking to invest. The trick is that these relationships take time to build as you need to establish a level of trust. For example, a lawyer is not going to refer one of their clients to someone they just met. The relationship needs to be established first. If you plan on issuing a private offering in the future, start building the relationships now. If you are ready to launch, this is a long term strategy that likely won’t produce results within a short time frame.

You can also attend investment group meetings and ask to present your deal. These groups have local accredited investors in them, many of which actively invest. Make sure to follow up with everyone you meet to take the deal all the way through closing.

If you want to hit the ground running and raise capital quickly, the best way to do so is to purchase a list of private placement leads from www.salesleads.tv or www.accreditedinvestorleads.com.

SEC Lifts 80 Year Ban on Private Offerings

The U.S. Securities and Exchange Commission Removes 80 Year Old Ban on Advertising for Private Offerings 

Great news for companies and investors!  After 80 years the SEC has finally lifted the ban on publicizing shares in private offerings.  This ban has made it extremely difficult for people without a black book to raise money.  Companies and their representatives have had to rely on verbal communication only, as any advertising could lead to a violation of Reg D.  Now after almost a century the SEC has finally lifted the ban in a 4-1 vote.  The new rule will take effect 60 days after the SEC publishes it in the Federal Register.

The SEC Lifted the Advertising Ban in Response to Pressure from Congress. 

When Congress passed the JOBS Act they asked the SEC to lift this ban as well.  The lack of being able to advertise caused most investors to miss the opportunity to invest in a private offering, simply because they wouldn’t hear about it until it was closed and had been announced.  Now companies will be able to more broadly advertise.  They still need to note that the offering is for Accredited Investors.

Now a Private Placement Memorandum can be advertised on YouTube, Facebook, Twitter, and other forms of social media along with Press Releases and a company website. 

Companies should still exercise caution in their advertisements to make sure they do not violate anything in Reg D, Rule 505, or Rule 506 and risk blowing their “safe harbor” protections under the Act.  It is recommended that all advertisements be ran by an attorney to ensure they do not open a company up for unexpected risk.

It is also rumored that the SEC will consider it a “best practice” to advertise on Dealbreaker.  While this has not been an official request, following an SEC best practice is always a good idea.  Companies can contact Dealbreaker and purchase ad space on their site.

The Private Offering Market, through Reg D, is $900 billion per year!  This is $857 billion more than the money raised through initial public offerings.

With companies using private placement memorandums to raise billions of dollars investors have been eager to participate.  By lifting this ban the less “connected” investors will have access to invest in private offerings early on.  This new ruling will indeed be beneficial for both companies and investors, with time telling how much additional capital is raised through the advertisement of private offerings.

By lifting the ban the SEC has effectively made private offerings as close as you can get to going public, without all of the pesky registration requirements.  If you are in the business of promoting private placements your job just got easier.  Remember to continue targeting Accredited Investors to stay in compliance.  You can always get an updated list from AccreditedInvestorLeads.com

 

 

Accredited Investors and Blue Sky Laws

SalesLeads.tv is a leading seller of accredited investor lead lists. Marketers who use our lists to offer private placements should always be aware of the state regulations governing offerings that have been exempted from registration by the Securities and Exchange Commission, since these offerings may also require exemption from state regulations. If an offering is exempt under the Federal securities laws, it does not necessarily imply exemption from state regulations. These state regulations are dubbed blue sky laws because they are aimed at defending potential investors from being duped into purchasing securities with “as much value as a patch of blue sky”.

Thus, state blue sky laws have been established to protect the public from fraud. Each state has its own unique set of laws, but they all lay out regulations for the registration and exemption of securities sold within the state. Also, each state has its own regulatory body to enforce its laws and specify the legal basis for civil law suits. Forty states have adopted model uniform securities statutes, arising from the Uniform Securities Act of 1956, upon which they base their blue sky laws.

In recent years, Federal laws were passed which circumscribed the power of the states to critique, confine or otherwise limit the sale of most securities. The law’s purpose was to remove redundancies occurring among Federal and state securities laws. Currently, the abilities of most states to prohibit registration or exemption from registration of securities offerings that are made on a national or regional basis have been substantially limited. Nonetheless, there are still notice and filing requirements in each state that must be observed. Additionally, Federal legislation did not remove the authority of the state regulators to lead investigations and to pursue legal actions for fraud.

Fortuitously, many kinds of securities, and many security transactions, are exempt from state registration rules. Exemptions under Rule 506  of Regulation D are not subject to state review, with the exception of New York State. Many states provide exemptions for Regulation D private placements, as long as there is complete observance of SEC Rules 501-503. However, though particular kinds of offerings or transactions may not necessitate registration, many states demand filings or place extra conditions on exemptions. An issuer, before offering an exempt security for sale in any state, should retain experienced blue sky counsel to assess the pertinent state regulations and take whatever steps are needed to allow the offering to be made in any given state.

Eric Bank

Lead Pricing

We are sometimes asked why we sell our leads for $0.25 to $0.50 each, while some of our competitors sell leads for $0.07. We’d like to take this opportunity to explain the difference between our leads and those of the competition. In the end, we think you’ll agree with us that the quality of our leads is well worth the price.

First, we don’t want to cast stones at all of our competitors. Some are legitimate organizations that try to do a good job. That being said, there is no way a lead list sales organization can sell legitimate leads at seven cents each. You see, we reject leads every week that do not meet our quality standards. We also assemble special purpose lists that require additional resources to put together. Here is why we are so proud of the high-quality leads we sell:

  1. Real Accredited Investor Data, Not Models —We prepare special lists that only include leads that meet certain criteria. For instance, our list of accredited investors only includes leads who have $1 million in wealth (excluding home value) or have earned $200,000 over each of the last two years. This kind of information is vital for various investment clients who can only make private placement offerings to accredited investors. We collect our data from surveys performed by Series 7 and Series 24 Brokers at least twice in the last six months. These lists are the highest quality.

 

Did you know that many of our competitors sell lists of accredited investors based on Zip Code + 4 modeling? This data is only 65 percent accurate! That means you are paying for crappy data.

Telemarketing efforts based on these lists will surely backfire, as most people on the list have never expressed interest in private placements. The only payoff you are likely to receive from calling these listees is an angry response.

 

Financial customers who buy lists of accredited investors on-the-cheap are getting junk data. They may think that they can spend a few hundred dollars on lists that will provide them with names willing to invest millions – not the kind of people we want to deal with. SalesLeads.tv serves a client base that values the quality of accredited investor lists and understands the extra costs in using certified surveys instead of screwball Zip Code models.

 

  1. National Compliance: The National Do Not Call (DNC) Registry allows Americans to stop the majority of unsolicited calls. This includes most telemarketing calls. The law, passed in 2004 and updated in 2007, provides for certain exceptions:
  • It pertains to residences, not businesses.
  • It allows phone calls to be placed by political, non-profit and survey organizations.
  • Bill collectors cannot be blocked by the DNC Registry.
  • Businesses with pre-existing relationships over the last 18 months can continue to call.

The enforcement of DNC is shared by the Federal Communications Commission and the Federal Trade Commission. Offenders may be sued in court and be subjected to significant fined.

SalesLeads.tv screens all leads against the DNC Registry. You will never be sold a non-compliant lead. Can you be sure that the seven cents crowd is going through the time and expense to certify that all their leads are DNC compliant?

  1. State Compliance: Most states have their own DNC Registries, although some have merged their lists into the national one. We check each lead for state DNC compliance before we certify it for sale. We pay for access to the state lists, which is factored into the prices we charge. Could it be that the seven cents guys are not bothering with state lists?
  2. Duplicates: We make an extra effort to eliminate duplicate leads. Duplicates can occur when two or more names or spellings refer to the same lead. For instance, Mary Jones and M. Jones may be the same person. We are very good at weeding out duplicates. Do you think the low-ballers care?

As you can see, we are passionate about the quality of our lists. When you buy from us, you get the peace of mind knowing all our leads our certified compliant, based on real survey data and legitimately categorized, guaranteed. We invite you to give us a try and see for yourself!

Eric Bank

JOBS Act & Accredited Investor Leads

Effect of JOBS Act on Demand for Accredited Investor Leads

What Will Be the Role of Accredited Investors in Private Investments?

As the different ramifications of the 2012 JOBS Act begin to sink in, some assumptions have been made regarding the future role of accredited investors with regard to private investments. The Act specifies rules that change Rule 506 of the Security and Exchange Commission’s Regulation D. Rule 506 provides a safe harbor for the offering and sale of certain private, unregistered securities. Previously, Rule 506 allowed unlimited private fundraising from an unlimited number of accredited investors – investors with $1 million in wealth or $200,000 income in each of the previous two years – and up to 35 non-accredited investors (assuming certain financial disclosures are met). The old Rule 506 also prohibited general solicitation or marketing of restricted securities to the public.

The new rules contained in the JOBS Act lifts the marketing prohibition on Rule 506 offerings. Rule 506, according to the SEC’s Division of Risk, Strategy and Financial Innovation, is already the most frequently used safe harbor rule within Reg D (the others being Rules 504 and 505), and this lifting of marketing restrictions will no doubt accelerate the move to Rule 506-based private placements. Some have speculated that the regulations will diminish the role of accredited investors in Rule 506 offerings because of the dropped ban on general advertising. However, this viewpoint overlooks the fact that fully 90 percent of Reg D offerings are composed entirely of accredited investors. In other words, most everyone who invests in a Reg D offering is accredited, and there is no reason to believe they will be crowded out in the future.

One reason why accredited investors will most likely continue to dominate the private placement market is that private companies prefer them:

  1. Accredited investors, who are by definition wealthy, can on average make larger purchases than can non-accredited ones.
  2. By favoring large investors, private firms can reduce the number of small investors, which means reducing the total number of investors.
  3. Reducing the number of different investors saves operational costs, increases privacy, and in general reduces the hassles of dealing with a lot of small investors.

Therefore, the demand for accredited investors is likely to remain robust even when the SEC roles out the final version of its new rules. SalesLeads.tv is the industry leader in the sale of accredited investor lead lists and is looking forward to the continuing opportunity of providing clients with the highest quality lists that are DNC and state-law compliant.

Eric Bank