Both Rule 506(b) and Rule 506(c) require issuers and associated parties, such as general partners and executive officers, to comply with the “bad actor” disqualification provisions under Regulation D.
These provisions prohibit certain individuals who have been involved in fraudulent activities or violations of securities regulations from participating in exempt offerings. Issuers should conduct due diligence on their team and potential investors to ensure compliance with these disqualification provisions, thus avoiding potential penalties or SEC registration requirements. Non-compliance with securities laws and regulations can result in a variety of consequences, including fines, penalties, and even criminal charges.
Ipsen Due Diligence gets involved when potential or current investors have questions about the background or decisions made by the GP or members of the management team.
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