The Securities and Exchange Commission governs private placements exemption from registration of securities on an exchange that are still sold to the investing public via Regulation D (Reg D). Reg D offerings are attempted by private companies or entrepreneurs because funding is faster at a lower cost than in a heavily reviewed and documented public offering. The problem many investors face are illiquidity, company failure and the end of promised distribution income.
Studies show that in the past 14 years, there have been $20 trillion in Reg D offerings, $7.7 trillion sold by brokers; $4.8 trillion of that has happened since 2016. Reg D Fraud Lawyers in New York at Malecki Law know the losses these investments can cause investors.
Studies estimate that close to 10% of Reg D offerings fail, meaning likely in excess of $5 trillion sold by brokers in the past 6 years may have failed. Approximately one-third of Reg D offerings reportedly fail within the first six years and approximately 25% are sold by high-risk brokerage firms.
From a dollar-amount basis, research shows that JP Morgan Securities LLC, MBSC Securities Corporation, Merrill Lynch, Pierce, Fenner & Smith Incorporated and UBS Financial Services, Inc. all have the largest market share in these types of investments, although JP Morgan outsizes at $1.2 trillion (over 1,000 offerings), while MBSC is a close second at over $985 billion and Merrill Lynch closely follows them at over $735 billion – making UBS’ $504 billion pale in comparison. Malecki Law’s Reg D Fraud law firm is closely monitoring these types of investments, particularly those that fail.
The above four firms are not alone in the Reg D market, of course, thousands of offerings representing individual firms’ participations between $132 billion and $500 billion are sold through the following firms: Morgan Stanley Smith Barney LLC, Credit Suisse Securities (USA) LLC, Goldman Sachs & Co., Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Barclays Capital Inc., Morgan Stanley & Co. LLC, Park Hill Group LLC, Saxony Securities, Inc., UBS Securities LLC, John Hancock Investment Management Distributors LLC, BNP Paribas Securities Corp., Evercore Group L.L.C., CAIS Capital LLC, Stifel Nicholas & Company, Incorporated and Greenhill & Co., LLC. While you may not know all these names, many will be remarkably familiar to you, as they are to Malecki Law’s Reg D Fraud Attorneys, who have sued many of these firms for these types of issues in its over 20 years (and Ms. Malecki’s over 30 years) prosecuting defrauded investor cases.
It has been estimated that over the last 12 years, commissions to brokers for issuers registered in just Delaware, NJ, Oklahoma, Arkansas and Cayman Islands is over $28 billion, and another $4 billion for issuers registered in the other forty-six states. Needless to say, if you follow the money, you will find that selling highly speculative Reg D investments is a lucrative, big business. Moreover, the failure rate in Reg D investments is thought to be underestimated, as many Reg D companies will keep the company active to avoid complaints, but can still be in bankruptcy and failing badly.
Notably, when speaking of failed Reg D investments, it has been uncovered in a study that National Securities Corp, VSR Financial Services, Inc., Independent Financial Group, Aegis Capital Corp. and Kalos Capital, Inc. may be investing investor assets of over $16 billion in offerings showing a staggering 22.5% failure rate, above average, with a staggering potential loss of $3.6 billion.
If you have a failing Reg D investment sold by a brokerage firm, named above or not, Malecki Law’s Reg D Fraud Lawyers are eager to hear from you to see what can be done for you and other investors. The initial consultation is always free and various fee structures, including contingency, can be discussed. We look forward to hearing from you to discuss your situation in a pressure-free environment.