nd.gov - The Official Portal for North Dakota State Government
North Dakota: Legendary. Follow the trail of legends
ND Securities Department
600 East Boulevard Avenue
State Capitol, 5th Floor
Bismarck, ND 58505-0510
Phone: (701)-328-2910
Toll Free: (800)-297-5124
Fax: (701)-328-2946

Jennifer Kurtz

Investigator
600 East Boulevard Avenue
State Capitol, 5th Floor
Bismarck, ND 58505-0510
Phone: (701) 328-2926
Toll Free: (800) 297-5124
Fax: (701) 328-0148
Email: jkurtz@nd.gov
Grafton Office
701 W 6th Street, #312
Grafton, ND 58237
Phone: 701-352-4592

Private Offerings

Fraudulent private placement offerings continue to rank as the most common product or scheme leading to investigations and enforcement actions by state securities regulators. These offerings commonly are referred to as Reg D/Rule 506 offerings, named for the exemption in federal securities laws that allows private placements to be sold to investors without registration).  By definition these are limited investment offerings that are highly illiquid, generally lack transparency and have little regulatory oversight.  While Reg D/Rule 506 offerings are used by many legitimate companies to raise capital, they carry high risk and may not be suitable for many individual investors.  With the passage of the  JOBS Act and recent adoption of rules implementing certain aspects of the Act, restrictions on how Reg D/Rule 506 offerings can be marketed to the general public have been relaxed, including the lifting of an 80-year ban on general solicitations (advertising).  Investors soon will begin to see advertisements for private placement offerings on a variety of platforms including social media, billboards, or t-shirts on window washers as one startup has proposed, even though only a very small percentage of the population will be eligible to invest.  And, as is often the case, scam artists are likely to use this legally permissible avenue to their advantage leading, no doubt, to another year of Rule 506 offerings holding the top spot as the most frequent source of state securities enforcement actions.