DBO Consumer Alert: Private Placement Offerings

The DBO today issued an investor advisory on exempt securities offerings, also known as “private placements,” in light of the coronavirus pandemic. Because fraudsters often try to capitalize on current issues and problems to promote their scams, the COVID-19 pandemic has motivated some to try to capitalize on the disruption and anxiety to individuals and the financial markets.

Private offerings made under Rule 506 are not reviewed by regulators and, as a result, there is an increased potential for fraud. The advisory provides an overview of private placement offerings, the risks associated with these offerings, and the steps investors can take to minimize their risk of falling victim to fraudulent private placement offerings.

The full advisory is available on the DBO’s website here https://dfpi.ca.gov/2020/05/26/advisory-to-consumers-on-private-placements.