1.1.2.3. Safe Harbor for Private Placements Sold Directly from the Issuer
Many private placements are made directly by the issuer without use of a private placement agent, broker-dealer, or underwriter in connection with the offering. For these types of transactions, the SEC created a “safe harbor” allowing employees and other representatives of the issuer to sell the issuer’s securities without having to register as a broker.
Rule 3a4-1 applies to “associated persons” of the issuer, which includes officers, directors, or employees of either the issuer or a company under common control with the issuer.
Rule 3a4-1 establishes three threshold requirements and three alternative exemptions. If an associated person meets all three threshold requirements and one of the three alternative exemptions, the associated person will not be deemed to be a broker solely by his participation in the sale of the issuer’s securities.