Private Placement Memorandums

Private Placement Memorandums (PPM’s) are an excellent way to raise capital and many companies have used them as an alternative to raising funds through the stock market.  As traditional bank financing has declined Private Placement Memorandums is to provide a way to raise capital through debt, equity, or a combination of the two.  Small broker dealer firms along with large industry players like HSBC have begun to offer these services to more and more clients.  Recognizing the trend for more broker dealers to use Private Placement Memorandums to raise capital, FINRA has issued a new FAQ on guidelines and regulations for disclosure documents and filings.

If you are a registered broker dealer raising money through Private Placement Memorandums here are some things you should know.

  • FINRA has a Private Placement Filing System in the FINRA Firm Gateway.  Member Firms need file the offering documents prior to soliciting investors.
  • Obtain an “SSA” to get access to FINRA’s system by completing an SSA entitlement form.
  • All offering documents need to be uploaded.  This includes the PPM, term sheet, reservation forms, and any other documents associated with offering and securing investment.
  • In typical government fashion, even if no offering documents were used, firms are required to upload a document stating “no offering documents were used.”
  • If any changes are made to the offering documents the amended versions also need to be uploaded.
  • There are no specific FINRA disclosure requirements.  Broker dealers need to use their best judgment to ensure that all offering documents are accurate, clear, and comply with the Securities Act of 1933.
  • PPM’s sold to Accredited Investors must be uploaded into the system.  This also applies to directors and general partners of the issuer.
  • If the PPM is sold to a bank, insurance company, registered investment company, or business development company it does not need to be uploaded.
  • Member Firms that are participating in crowdfunding activities do not need to upload offering documents for crowdfunding campaigns.

Broker dealers can get additional information by visiting FINRA’s website or by calling them directly at (240) 386-5520.  FINRA also offers continuing education classes for broker dealers that want more information on how to stay in compliance with changing laws.  You can also access their online library for educational materials and tools.

Staying in compliance with FINRA regulations is essential for broker dealers raising funds through accredited investors.  While Reg D does provide the opportunity to raise capital, there are still regulations that must be followed in order to avoid any violations.  When in doubt, avoid making a mistake and give FINRA a call.  At we provide you with the leads you need to reach investors and raise money.  FINRA outlines the method in which you do so.

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