Private Offerings and Public Ends: Reconsidering the Regime for Classification of Investors Under the Securities Act of 1933


Investment in private offerings of securities, those that take place off of public exchanges and that are exempt from federal disclosure rules applicable to public offerings, is primarily available to investors on the basis of wealth. The wealthy are presumed sophisticated enough to make informed decisions about what to buy without mandatory disclosures applicable to public offerings. Yet the financial crisis of 2008 made clear that wealthy and ostensibly sophisticated investors can make tremendous mistakes and suffer enormous losses. Those losses are a problem when the investor serves a public goal, such as providing income to public sector employees. This Article argues that investment in private offerings by institutions serving a public mission should be limited to ensure that public ends are protected.

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