You were told this was an exclusive opportunity. A private placement available only to select investors. High returns, limited risk, and preferential access. Now the investment has collapsed, distributions have stopped, or the money is gone.
Private placements sold under Regulation D exemptions bypass many of the protections that apply to registered securities. Haselkorn & Thibaut, P.A., operating as Investment Fraud Lawyers, helps investors recover losses from private placements that were mis-sold or misrepresented. Our partners are former Wall Street defense attorneys. We know the due diligence firms are required to perform and the red flags they often ignore.
Call 1-888-885-7162 for a free, confidential case review. We work on a contingency basis — no recovery, no fee.
What is private placement fraud?
Private placements are securities offerings that are exempt from full Securities and Exchange Commission (SEC) registration. They are often sold only to accredited investors and rely on Regulation D. Because they are not registered, they come with limited disclosure, no public market, and often high commissions.
Private placement fraud occurs when a broker or issuer misrepresents the investment or hides risks. It also occurs when the product is sold to investors who do not meet the eligibility requirements. The broker may also fail to conduct the reasonable investigation Financial Industry Regulatory Authority (FINRA) requires before recommending the offering.
Signs you may be a victim of private placement fraud
| Warning sign | Why it matters |
|---|---|
| Promises of high, steady returns | Legitimate private placements carry real business risk |
| Limited or missing disclosure | You cannot evaluate what you cannot see |
| Pressure to act quickly | Fraudsters use urgency to bypass due diligence |
| High commissions paid to the broker | Commissions of 5–12% can distort recommendations |
| No public market to sell | You may be unable to exit when problems arise |
Common private placements involved in fraud claims
Some private placements have caused widespread investor losses. The table below lists examples we have encountered in investor claims.
| Private placement | What happened | Investor impact |
|---|---|---|
| GPB Capital Holdings | Alternative asset firm accused of misusing investor funds and overstating performance | Investors faced suspended redemptions and significant losses |
| GWG L Bonds | High-yield life-settlement bonds filed for bankruptcy in 2022 | Retail investors lost substantial principal |
| DBSI, Inc. | Real estate investment company involved in securities fraud litigation | Investors recovered through settlements and arbitration |
| Medical Capital Holdings | Private placement issuer alleged to have operated as a Ponzi scheme | Investors suffered near-total losses |
How we build your private placement fraud case
We compare the offering documents to what the broker actually told you. We look for missing risk disclosures, false performance claims, and eligibility failures. We also review the firm’s due diligence file to see whether it followed FINRA Regulatory Notice 10-22.
Our cases typically proceed through FINRA arbitration against the broker and the firm. When the issuer is still solvent, we may also pursue civil claims or bankruptcy claims.
What you can recover
Investors who prove private placement fraud can recover the principal they lost, interest, and in some cases attorneys’ fees. When the firm failed to supervise the broker, the firm shares liability.
Why choose our firm
We have handled private placement claims involving some of the largest failed offerings in recent years. Our 98% success rate reflects both our preparation and our willingness to take cases to hearing. Because our partners once defended the institutions we now sue, we understand the defenses before they are raised.
Related practice areas
Frequently asked questions
What is a private placement?
A private placement is a securities offering that is exempt from full SEC registration. It is typically sold to a small number of accredited or qualified investors.
Why are private placements risky?
They have limited disclosure, no public market, and often high fees. Many are also illiquid, meaning you may be unable to sell when you need cash.
Can I recover money from a private placement loss?
Yes, if the broker or firm misrepresented the investment, failed to disclose risks, or recommended it despite unsuitability. We file FINRA arbitration claims to pursue recovery.
What is FINRA Regulatory Notice 10-22?
It reminds firms that they must perform reasonable due diligence before recommending a private placement. Firms cannot rely solely on the issuer’s disclosures.
Do I need to be an accredited investor to have a claim?
No. Even accredited investors can be victims of fraud if the broker misrepresented the investment or failed to conduct adequate due diligence.
How do I start a case review?
Call 1-888-885-7162 or contact us online. The consultation is free, and we work on a contingency basis.
How Regulation D creates both opportunity and risk
Regulation D allows companies to raise capital without registering securities with the SEC. That exemption saves issuers time and money. It also means investors receive less disclosure and have fewer resale options than they would with a public offering.
Brokers who sell Regulation D offerings must still perform meaningful due diligence. They cannot hide behind the exemption. FINRA Regulatory Notice 10-22 makes clear that firms must investigate the issuer, management, assets, claims, and use of proceeds. They must do this before recommending a private placement to customers.
What a reasonable due diligence review looks like
| Due diligence item | Why it matters |
|---|---|
| Issuer financials | Shows whether the company can meet its obligations |
| Management background | Reveals prior failures, litigation, or regulatory sanctions |
| Use of proceeds | Shows how investor money will be spent |
| Third-party valuation | Confirms assets exist and are properly valued |
| Customer eligibility | Verifies the investor meets suitability and accreditation standards |
Common broker excuses and why they fail
Brokers sometimes claim that private placements are exempt from oversight, that the investor was sophisticated, or that the offering documents disclosed all risks. These excuses do not excuse fraud or unsuitability.
Exemption from SEC registration does not exempt a broker from FINRA suitability rules. Being accredited does not make a high-risk, illiquid product suitable. And disclosure documents are useless if the broker never explained them.
This page is for informational purposes only and does not constitute legal advice. Past results do not guarantee future outcomes.