What Are Private Securities?
Section 5 of the United States federal Securities Act of 1933 generally provides that it is unlawful for any person to sell its securities unless there is a “registration statement” in effect. The process of filing a registration statement with the SEC is long, arduous, and expensive. At the end, your securities are traded on an exchange like the NYSE or NASDAQ, and you are a company like Apple or Exxon. Fortunately, there are exemptions in the securities laws that allow for the sale of securities other than pursuant to a registration statement. These securities are “private”, and the general rule under Section 4(a)(2) of the Securities Act is that Section 5 does not apply to “transactions by an issuer not involving any public offering.” Filing a registration statement with the SEC might cost $1 million in legal fees alone. A good securities attorney can help you lawfully raise money for your business for a fraction of that cost.