Private Placement Securities - Investments for Sophisticated Investors

Financial advisor Darrach Bourke serves as the senior vice president of wealth management at Emerson Equity in San Mateo, California. Alongside traditional brokerage-service offerings, Darrach Bourke and his associates at Emerson Equity make alternative investments including private placements available to high-net-worth clients. 

Private placement investments in securities are exempt from SEC registration and are not available to the general public. They are regulated under the Securities Act of 1933, which provides guidelines for trading on the open market as well as trading in private placements. 

Under these rules, people who wish to invest in a private placement are typically required to be accredited investors. This means they either have a net worth exceeding $1 million, not including their home, or they earn annual income in excess of $200,000. These individuals are expected to be qualified investors who understand the benefits and risks of unregistered offerings.

In some situations, non-accredited investors who do not meet net worth or income requirements are able to invest in private placements. These individuals must demonstrate that they are financially sophisticated and experienced enough to evaluate unregistered investments. Issuers are required to answer questions about the investment when dealing with non-accredited investors, in order to allow such investors to make fully informed decisions.