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Secretary of State Connie Lawson Issues Investor Advisory on Private Placement Offerings
Start Date: 4/3/2013 All Day
End Date: 4/3/2013
Entry Description

Lifting the advertising ban will expose investors to increased risk of fraud


INDIANAPOLIS (April 3, 2013) — In advance of a federal rule to allow advertising of high-risk and potentially fraudulent private placement offerings, Secretary of State Connie Lawson today issued an advisory cautioning investors about the risks these offerings carry. The advisory is available at


Private placement offerings allow companies to raise money by selling stocks, bonds and other instruments. These offerings may be exempt from federal securities registration requirements.  As a result, this exemption allows a company to raise business capital without having to comply with the registration requirements of a public securities offering. 


Currently, Rule 506 of Regulation D of the Securities Act of 1933 does not permit general solicitation or advertising of private placement offerings. The JOBS Act directed the Securities and Exchange Commission (SEC) to lift this ban as long as the sales are limited to “accredited” investors – people who have sufficient wealth or access to information that would presumably allow them to make completely informed investment decisions.  The SEC is finalizing its proposed rule lifting the ban.


“I am concerned that Main Street investors in Indiana will be lured into high-risk or fraudulent investments when the ban on general solicitation of private placement offerings is lifted,” said Secretary Lawson. “These offerings are generally made to a small number of chosen investors and may lack critical information. I caution investors to remember if it sounds too good to be true, it probably is.”


Once implemented, this rule will allow companies and promoters to offer securities through direct mail, cold calls, free lunch seminars and television or radio commercials. The advisory warns investors that unscrupulous companies and promoters may take advantage of the new rules to offer potentially fraudulent investments.


The advisory includes information on the risks associated with private placement offerings and tips on how to protect yourself when considering such an offering.


“Rule 506 has been used by legitimate small businesses as an important source of capital, and state securities regulators want those businesses to be able to thrive and create jobs without unnecessary regulatory impediments,” said Securities Commissioner Chris Naylor. ”However, a healthy private placement marketplace requires investors who feel adequately protected.”


For more information about the risks associated with private placement offerings, contact the Securities Division of the Secretary of State’s office at 1-800-223-8791 or visit us online at

Contact Information:
Name: Valerie Kroeger
Phone: 233-8655
Entry Type:
Press Release
Entry Category:
  • Alerts and Notification
  • Announcements
  • Category:
  • Government
  • Agency Name
    Secretary of State

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