Quick Answer
A firm or person who solicits or effects sales of an issuer's securities in a private offering is acting as a broker. It is unlawful for a broker or dealer (BD) to use the mails or interstate commerce to effect transactions in a non-exempt security, or to induce their purchase or sale, unless registered with the SEC.
The rule polices who may lawfully solicit or effect a private-placement sale in the first place. It says nothing about what a registered placement agent must do once engaged; that conduct standard belongs to a different unit.
Who Must Register as a Broker-Dealer to Sell a Private Offering?
It is unlawful for a broker or dealer to use the mails or interstate commerce to effect transactions in a non-exempt security, or to induce or attempt to induce their purchase or sale, unless that broker or dealer is registered with the SEC. A private placement is exempt as a transaction, not as a security, so this duty still reaches a placement agent selling one.
A firm or person acting as a placement agent in a private offering, soliciting or effecting sales of the issuer's securities, is acting as a broker for this purpose and must be a registered broker-dealer (BD) to do so.
Exam Tip: Gotchas
- This is a registration requirement, not a conduct standard. It answers who may lawfully solicit or effect the sale of a private offering, not what a registered placement agent must do once it is engaged.
What Should You Check on Exam Day?
- Confirm a placement agent soliciting or effecting sales of an issuer's securities is acting as a broker and needs BD registration.
- Distinguish the registration question (who may lawfully sell) from a conduct question (what a registered agent must do once engaged).