SIE practice questionmediumRegulation D / Private Placements
A broker-dealer offers a Regulation D private placement to clients who are not accredited investors and fails to provide full disclosure documents. Which best describes the regulatory infraction?
- APermissible sale due to exemption
- BImproper sale - both suitability and disclosure rules violated✓ Correct answer
- CViolation of Regulation S
- DViolation of margin requirements
Explanation
Why B — Improper sale - both suitability and disclosure rules violated
Regulation D allows certain private placements to accredited investors and requires disclosure for non-accredited participants. Selling to non-accredited investors without full disclosure violates the rule. Reg S governs offshore offerings, and margin rules aren’t involved.
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