Key Takeaway: Private placements sold under Regulation D exemptions bypass the investor protections of registered securities, making them one of the most common vehicles for investment fraud — and investors who lost money may have FINRA arbitration claims against the brokers and firms that recommended them.

Private Placement Fraud Attorney — Recover Losses From Reg D Offerings

You were told this was an exclusive opportunity. A private placement available only to select investors. High returns, limited risk, preferential access. The paperwork was thick, the language was technical, and your broker assured you it was all standard.

Now the investment has collapsed — or the distributions have stopped — and you’re realizing that the “exclusive opportunity” was really a high-risk, illiquid product with minimal disclosure, sold to you by a broker who earned a commission of 5–12% on the sale.

Private placements are one of the most common vehicles for investment fraud in the United States. The very features that define them — exemption from SEC registration, limited disclosure requirements, no public market — are the features that make them dangerous. And when a private placement goes bad, the losses can be total.

Haselkorn & Thibaut has over 50 years of experience recovering losses from private placement fraud. Our 98% success rate reflects our deep understanding of Reg D offerings and the brokers who sell them.

Call 1-888-885-7162 for a free consultation, or contact us online to speak with a private placement fraud attorney.

What Is Private Placement Fraud?

Private placement fraud occurs when a broker or financial advisor misrepresents, omits material facts about, or recommends an unsuitable private placement investment to a customer — typically a Regulation D (Reg D) offering that is exempt from SEC registration requirements.

Regulation D provides three primary exemption rules that allow companies to raise capital without the cost and disclosure obligations of a public offering:

Rule 504 — Allows companies to raise up to $10 million in a 12-month period from any type of investor, with limited disclosure requirements
Rule 506(b) — Permits unlimited capital raising from accredited investors and up to 35 non-accredited investors, with no general solicitation
Rule 506(c) — Allows unlimited capital raising from verified accredited investors only, with general solicitation permitted

The critical point: Reg D offerings do not require the same level of disclosure, financial reporting, or regulatory oversight as publicly registered securities. The company decides what information to share — and what to leave out.

Private placement fraud takes many forms: overstated financial projections, concealed conflicts of interest, failure to disclose related-party transactions, selling to investors who don’t qualify as accredited, and recommending private placements that are fundamentally unsuitable for the investor’s financial situation.

For a detailed analysis of private placement risks, see: Private Placement Fraud: Why Reg D Offerings Are a Hotbed for Investor Losses →

Signs You May Be a Victim of Private Placement Fraud

You were told the investment was “exclusive” or “limited” — Brokers create false urgency by claiming an offering is available only to select clients or is about to close. This pressure tactic prevents you from conducting independent due diligence and may indicate that the broker is prioritizing their commission over your interests.
You can’t access your money — Private placements are inherently illiquid. There’s no public market to sell your shares, redemption programs are limited and often suspended, and you may be locked in for years — sometimes until the company goes public, is acquired, or liquidates. If you needed liquidity, a private placement should never have been recommended.
The financial projections were overly optimistic — The offering documents promised returns of 10%, 15%, or more, but the actual performance has been disappointing or nonexistent. Many private placement issuers use aggressive projections that have no reasonable basis.
Your broker didn’t verify your accredited investor status — To participate in most Reg D offerings, you must be an accredited investor (net worth exceeding $1 million or income exceeding $200,000). If your broker helped you stretch the truth about your qualifications, they may be liable for the resulting losses.
Distributions have stopped or been reduced — Many private placements pay initial distributions from capital rather than actual profits — creating the illusion of a successful investment. When new capital slows, the distributions stop. This pattern is common in private placement fraud and may resemble a Ponzi structure.
The issuer has been sanctioned or investigated — FINRA, the SEC, and state regulators frequently investigate private placement sponsors and the broker-dealers who sell their products. If the issuer of your private placement has been sanctioned, that information should have been disclosed.

Call 1-888-885-7162 for a free consultation, or contact us online — we can evaluate whether your private placement was properly sold.

How We Build Your Private Placement Fraud Case

Offering document review — We analyze the Private Placement Memorandum (PPM), subscription agreements, and any supplementary materials. We identify misrepresentations, omissions, and conflicts of interest that were not adequately disclosed.
Broker due diligence failures — Under FINRA rules, broker-dealers must conduct reasonable due diligence on private placements before recommending them to customers. We investigate whether your broker and their firm actually investigated the offering — or simply accepted the issuer’s representations at face value to earn the commission.
Suitability analysis — We compare the private placement’s risk profile, illiquidity, and fee structure against your investment profile. If you needed liquidity, had moderate risk tolerance, or lacked the sophistication to evaluate a private placement, the recommendation was unsuitable.
Accredited investor verification — We investigate whether you genuinely qualified as an accredited investor at the time of the recommendation. If your broker helped you inflate your qualifications or accepted self-certification without verification, the sale may be invalid.
Damages calculation — We calculate your total losses, including the principal invested, any phantom income reported to the IRS, and the opportunity cost of what your money would have earned in a suitable investment.

Common Private Placements Involved in Fraud Claims

GPB Capital Holdings

GPB Capital raised over $1.7 billion from investors through private placements in automotive dealerships and waste management. The SEC charged GPB with running a Ponzi-like scheme, and the firm’s founder was indicted. Investors have suffered massive losses, and FINRA arbitration claims against the selling broker-dealers have yielded significant recoveries. See our GPB Capital Update →

GWG L Bonds

GWG Holdings issued L Bonds — a form of private placement — that raised over $1.6 billion from retail investors. The company filed for Chapter 11 bankruptcy in 2022, and investors have suffered catastrophic losses. FINRA arbitration claims against the brokerage firms that sold GWG L Bonds are ongoing. See our GWG L Bonds Update →

DBSI, Inc.

DBSI sold private placements in commercial real estate that raised over $500 million before collapsing. The SEC alleged that DBSI was operating a massive Ponzi scheme. Many investors recovered a portion of their losses through FINRA arbitration claims against the selling broker-dealers.

Medical Capital Holdings

Medical Capital raised approximately $1 billion from investors through private placements in medical receivables. The SEC shut it down in 2009, and the receiver recovered a fraction of investor funds. Broker-dealers who sold the offerings paid significant settlements.

What You Can Recover

Through FINRA arbitration, victims of private placement fraud may recover:

Net out-of-pocket losses — The money you invested minus any distributions received
Rescission — Return of your original investment as if the private placement was never sold to you
Interest — Compensation for the time your money was locked up in an improper investment
Damages from misrepresentation — If the broker made false statements about the investment’s performance, risk, or features
Attorneys’ fees — May be awarded by the arbitration panel
Punitive damages — In cases where the broker or firm knowingly sold a fraudulent or unsuitable product

Private placement claims against selling broker-dealers have been among the most successful categories of FINRA arbitration claims because the due diligence obligations on brokers are clear, and the failure to meet those obligations is often well-documented.

Why Choose Our Firm

Over 50 years of experience recovering losses from private placement fraud
98% success rate across all investment fraud cases
Free consultation — we evaluate your case at no cost
Contingency fee — you pay nothing unless we recover money for you
Nationwide representation — we handle cases in all 50 states
Former Wall Street defense lawyers — we know how brokerages defend private placement claims
Active investigations — we are currently pursuing claims involving GPB Capital, GWG L Bonds, and other major private placement failures

Call 1-888-885-7162 for a free consultation, or contact us online — we can tell you whether you have a viable private placement claim.

Related Practice Areas

FAQ

What is a private placement? A private placement is a sale of securities that is not registered with the SEC. Instead of offering shares to the general public, companies sell stakes directly to a limited group of investors under exemptions provided by Regulation D. Because private placements bypass the registration process, they also bypass the disclosure requirements, financial reporting obligations, and investor protections that come with registered securities.

How is a private placement different from a regular investment? The key differences are: (1) private placements are not registered with the SEC, meaning there’s no prospectus or regulatory review; (2) they are illiquid — there’s no public market to sell your shares; (3) they have limited disclosure — the issuer decides what information to share; (4) they typically have high fees and high commissions for the brokers who sell them; and (5) they are generally available only to accredited investors who meet specific income or net worth thresholds.

Can I recover losses from a private placement even if the company is still operating? Yes. Your claim is against the broker and brokerage firm that recommended the private placement — not against the issuer. Even if the company is still operating, if the private placement was misrepresented, unsuitable, or sold without proper due diligence by your broker, you may have a FINRA arbitration claim. Many private placement claims succeed regardless of the issuer’s current status.

What if I signed a subscription agreement acknowledging the risks? Signing a subscription agreement does not prevent you from filing a claim. These agreements typically contain risk disclosures and waivers, but they cannot shield a broker from liability for misrepresentation, unsuitability, or failure to conduct due diligence. Courts and arbitrators have consistently held that boilerplate disclaimers do not override a broker’s regulatory obligations.

How long do I have to file a private placement fraud claim? FINRA arbitration claims must generally be filed within 6 years of the events giving rise to the dispute. However, if the fraud was concealed or you didn’t discover it immediately, the clock may start later. State statutes of limitations vary — some are as short as 2 years from discovery. The sooner you contact us, the better your position.

What if I’m not sure whether I was sold a private placement? Many investors don’t realize they were sold a private placement because the product was described differently — as a “note,” “bond,” “limited partnership interest,” or “direct investment.” If you invested in a product that is illiquid, doesn’t trade on a public exchange, and was sold directly by your broker rather than through a standard brokerage transaction, it may be a private placement. Our firm can review your account and identify these investments for you at no cost.

This page is for informational purposes only and does not constitute legal advice. Past results do not guarantee future outcomes.