Bad Actor Disqualification Provisions

ThinkingCapMarkets Podcast Series

Bradley Berman

11/17/2017

Capital Markets, Banking + Financial Services, Financial Institutions + Financial Services, Private Placements + PIPEs, and Broker-Dealer Compliance + Regulation

Audio

There are very similar disqualification provisions in Regulation A, Regulation CF (Crowdfunding) and Regulation D. These rules make these exemptions from registration unavailable for an offering if the issuer or certain “covered persons” is or has been subject to a relevant criminal conviction, regulatory or court order or other disqualifying event. If a covered person is subject to a disqualification event, then the offering participants must rely on a different exemption from registration, if one is available.

In response to these disqualification provisions, issuers and placement agents have put in place diligence procedures to identify offering participants who may cause the issuer to lose the benefit of the exemption. These diligence procedures must be followed prior to the commencement of the offering; they should not be an afterthought considered only after the offering has begun.

Morrison & Foerster’s Bradley Berman gives an overview of the bad actor disqualification provisions in this ThinkingCapMarkets podcast. Our recently updated FAQs can be accessed here: Frequently Asked Questions relating to the Bad Actor Disqualification Provisions.

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