Question 1

What is a private placement or unregistered securities offering?

Accepted Answer

A private placement is an investment sold outside the public markets, typically under an exemption from SEC registration such as Regulation D. That exemption means less public disclosure and less regulatory oversight than a registered offering — which is exactly why private placements are a common vehicle for fraud when a promoter misrepresents the investment or the underlying business.

Question 2

What is Regulation D, and does it matter whether I was an "accredited investor"?

Accepted Answer

Regulation D lets a company raise money without full SEC registration, most commonly under Rule 506(b) or 506(c). Rule 506(c) offerings can be advertised publicly but may only sell to accredited investors, with the issuer required to verify that status. Whether you qualified as accredited, and whether the issuer actually verified it, can matter a great deal to a fraud claim.

Question 3

How do I know if my investment was legitimate, or a red flag?

Accepted Answer

Warning signs include guaranteed or unusually high returns, pressure to invest quickly, vague or missing offering documents, returns that don't match the underlying business's actual performance, and difficulty getting your money back on request. If any of that sounds familiar, it's worth having the offering reviewed.

Question 4

What happens if the company or fund I invested in turns out to be a fraud?

Accepted Answer

It depends on how the fraud unwound. Some collapse into a court-appointed receivership or bankruptcy — as with the Ferrum Capital matter — which involves its own formal claims process and deadlines. Others are pursued through direct litigation or, if sold through a broker-dealer, FINRA arbitration against the firm that sold it.

Question 5

Does FINRA arbitration apply to a private placement dispute?

Accepted Answer

Only if the offering was sold through a FINRA-registered broker-dealer — many private placements are sold instead by unlicensed promoters or the issuer directly, in which case FINRA arbitration doesn't apply and the claim proceeds in state or federal court, or through a receivership process instead. Royal Lea can review how your investment was sold to determine which forum applies.

Question 6

What if the person who sold me the investment wasn't a licensed broker?

Accepted Answer

You may still have a claim — against the promoter individually, the fund manager, or others involved for breach of fiduciary duty, fraud, or violations of state securities law — even though FINRA arbitration isn't available. Unlicensed sales of unregistered securities are themselves often a violation worth pursuing.

Question 7

What is a receivership, and how does the claims process work?

Accepted Answer

When a fraudulent enterprise collapses, a court will often appoint a receiver to gather remaining assets and distribute them to investors and other claimants. The process runs on its own notices, claim forms, and bar dates set by the court — missing a deadline can forfeit a recovery. See our Ferrum Claim Information page for a real example of how this works.

Question 8

How much does it cost to hire an attorney for a private placement or securities fraud case?

Accepted Answer

Most investor cases are handled on a contingency fee basis — Royal Lea is paid a percentage of what is recovered, and there is no fee if there is no recovery. The initial consultation is always free.

Question 9

Why does it matter that Royal Lea is a sitting FINRA arbitrator?

Accepted Answer

Because he has sat on the panel deciding investor disputes, Royal Lea knows firsthand how arbitrators and courts weigh evidence, credibility, and damages. That insider perspective shapes how he builds and presents every case — an advantage very few opposing firms can match.

Securities Litigation FAQ

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