Private Placements

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Prepare your family and heirs to take on the responsibility of wealth.

Accredited investors have the opportunity to invest in capital that is not offered to the public market. These private offerings are known as private placements.

If you are an accredited investor looking to make a new investment, or if you are interested in becoming an accredited investor, continue reading and contact Alpen Partners today.

Your wealth is important. If you are serious about your life goals, financial planning and investments are probably important to you. Financial planning can involve many steps from tax optimization to asset protection. Different investments have different rules with different returns.

With the help of financial planning, you will be able to predict where you will be in the years to come by evaluating where you are currently, what sources of income you plan to have in the future, investments you plan to make, and your retirement plans.

What is a Private Placement?

A private placement is the term for when a company offers a security to individuals or small groups of investors as opposed to a public offering. The sale of the security is open to a small number of potential investors, which can be individuals or entities. They may include large banks, mutual funds, insurance companies, and pension funds. Unlike a public offering, a private placement is no available for sale on the open market.

Since the security of a private placement is not open to the public, there are not a lot of regulatory standards it must adhere to. Although it is raising capital through the sale of securities, it does not have to be registered with the United States Securities and Exchange Commission (SEC). The investment also does not need a prospectus and, often times, detailed financial information is not disclosed.

Why would a company offer a private placement? A private placements are often used when a company is trying to raise capital. Also, many fintech companies often use private offerings for newly emerging products.

More about the SEC

When a security is regulated by the SEC, it must be sold to the public in accordance with the Securities Act of 1933. After the stock market crashed in 1929, the law was set in place to make sure investors would receive proper disclosure when they bought securities. When a company issues stocks or bonds to the public, it must first register with the SEC and sell the security using a prospectus.

A prospectus is a legal document required by the SEC that gives details of an investment offering for sale to the public.

According to Regulation D of the 1933 Act, an issuer can sell securities to a group of accredited investors that meet certain requirements and be exempt from the regulation. This is what is considered private placement offerings.

What is an Accredited Investor

To be considered an accredited investor, an individual or entity must meet the SEC’s terms. These terms vary between jurisdictions and are often defined by local market regulators or other authorities.

The regulations are usually based on having a high income or net worth. An individual can also be considered accredited if they are a general partner, executive officer, director, or a related combination for the issuer of the unregistered security being offered.

For an entity to be an accredited investor, it is usually a private business development company or an organization with assets that exceed $5 million. If the entity consists of equity owners who are already deemed an accredited investor, the entity is also considered an accredited investor.


The biggest advantage to a private placement is the fact that it is not regulated by the SEC like a typical public offering. Also, privately placed bonds don’t require a credit agency rating.

Time and cost are two other advantages. When a security is issued to the public, there are significant underwriter fees, which means when issued in private, a large amount of money is saved. Additionally, the process of issuing private securities is also much quicker than public securities.

Custom-built deals can be made between the issuer investor with private placements. This means the financial needs can be met by both parties.


While the lower regulation and quicker and less expensive process is enticing, there are some downsides. With private placements, bond issuers usually pay higher interest rates in order to attract investors. Unregistered bonds aren’t assigned ratings which means it is not as easy for investors to determine their risk. Issuers need to be ready to pay investors a premium in exchange for taking on potential risk.

Selling private bonds can prove to be a bit of a challenge for issues because private placement limits the potential buyers.

Alpen Partners

With all of this talk of the SEC, this a good time to remind readers that Alpen Partners is an SEC-registered investment advisor.

In order to be an SEC-registered advisor, Alpen Partners has to register with the Securities and Exchange Commission (SEC) as an investment advisor. We have to apply the laws that covers federal securities laws and other topics related to investment advising.

At Alpen Partners , we believe the journey through financial planning and investment shouldn’t be done alone. Whether you are well-educated in the world of finance or you are just hoping to earn money through simple investment, an advisor can be by your side, guiding you through every step.

When looking for a wealth manager, don’t you want to know that your investments and wealth are in good hands? So do we. That is why Alpen Partners has chosen to register with the Securities and Exchange Commission as an investment advisor. SEC-registered advisors are certified and tested and can offer elite financial planning and investment advice.

Interested? Contact us now


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