Soliciting and Managing Investors
This information is provided for general informational purposes only and should not be relied upon as legal interpretations by the Office, shall not supersede any part of the Florida Statutes or Florida Administrative Code, and does not constitute legal or financial advice. The Office does not endorse any third-party or guarantee the accuracy of any third-party information linked to or referenced herein.
Prior to any communication with potential investors, companies should be aware that solicitation for private placements is strictly regulated. Many exempt offerings prohibit general solicitation and are limited to family, friends, and pre-existing relationships. Offering exemptions may also limit the number and types of investors that may participate in an offering. Some offering exemptions require the company issuers to confirm or reasonably believe the accreditation status of a potential investor before any money is received.
General Solicitation
General solicitation is any communication that prepares the market for an offering of securities, including newspaper or magazine advertisements, public website advertisements, television or radio broadcast advertisements, events, and conference presentations.
Pre-Existing Relationships
A pre-existing relationship is a relationship established with a prospective investor before the offering, either directly with the company or through the company’s intermediary (such as its broker-dealer or investment adviser).
Accredited and Retail Investors
An accredited investor is an individual that meets the criteria set forth in Rule 501(a) of Regulation D. Individuals may qualify by having: Annual single income exceeding $200,000 or joint annual income exceeding $300,000 in each of the two most recent years.
- More than $1 million in net worth (excluding primary residence).
- Certain financial professional credentials.
Non-accredited investors are all other investors that do not meet any of the accredited investor definitions
Verifying Investor Accreditation Status
Many offering exemptions set forth a reasonable belief of investor accreditation status. U.S. Securities and Exchange Commission Rule 506(c) requires issuers to take reasonable steps to verify accreditation status.