LEGAL INFORMATION NOTICE: This checklist provides general educational information only. It is not legal advice, does not create an attorney-client relationship, and may not apply to your jurisdiction or circumstances. Securities laws, regulations, filing requirements, exemptions, deadlines, and enforcement rules can vary and change over time. Consult a qualified securities attorney regarding your specific circumstances.

“The security may be legal to sell—and the way it is sold may still create a problem.”

Securities transactions can involve multiple layers:

SECURITY → OFFERING → DISCLOSURE → REGISTRATION/EXEMPTION → INVESTOR ELIGIBILITY → DOCUMENTATION → REPORTING

The legal question is often not simply “Is this investment legitimate?”

It can also be:

“How is this security being offered, to whom, under what exemption, with what disclosures, and under which laws?”

1. Securities law is highly technical.
2. Federal securities requirements can interact with state securities laws.
3. Not every security offering follows the same regulatory pathway.
4. Registration and exemption questions can be critical.
5. Investor eligibility can matter for certain offerings.
6. Private offerings can involve substantial information asymmetry.
7. Offering documents should be reviewed carefully.
8. Financial projections are not guarantees.
9. Past performance does not guarantee future performance.
10. Private securities can be highly illiquid.
11. Valuation can be difficult for privately held securities.
12. Conflicts of interest should be identified.
13. Compensation arrangements can influence incentives.
14. Finder, broker, adviser, issuer, and attorney roles should not be confused.
15. Disclosure quality matters.
16. Missing information can itself be important.
17. Side agreements can change the economics of an investment.
18. Investor rights can vary substantially among securities.
19. Preferred and common securities can have materially different rights.
20. Exit assumptions should be independently evaluated.
21. Securities litigation can be expensive.
22. Regulatory investigations can create significant costs.
23. A lawyer cannot guarantee that regulators will accept a particular structure.
24. “SEC compliant” should not be treated as a substitute for understanding the investment itself.
25. The key question is: “What exactly am I being asked to invest in, and what legal and economic rights come with it?”

---

C. PREMIUM BUYER CHECKLIST

1. IDENTIFY THE SECURITY

☐ Stock
☐ Preferred stock
☐ Debt/security note
☐ Convertible security
☐ Fund interest
☐ Private placement
☐ Other security

2. OFFERING

☐ Issuer identified
☐ Offering structure identified
☐ Registration status identified
☐ Claimed exemption identified where applicable
☐ Offering documents obtained
☐ Subscription documents reviewed

3. INVESTOR RIGHTS

☐ Voting rights
☐ Economic rights
☐ Liquidation rights
☐ Conversion rights
☐ Anti-dilution provisions
☐ Information rights
☐ Transfer restrictions
☐ Redemption rights

4. ECONOMICS

☐ Purchase price
☐ Fees
☐ Management costs
☐ Performance compensation
☐ Dilution
☐ Expected holding period
☐ Exit assumptions
☐ Tax considerations

5. CONFLICTS

☐ Issuer compensation
☐ Adviser compensation
☐ Referral arrangements
☐ Related-party transactions
☐ Insider ownership
☐ Conflicts disclosed

6. LAWYER

☐ Securities-law experience
☐ Relevant transaction experience
☐ Private-offering experience where relevant
☐ Regulatory experience
☐ Written scope
☐ Fees
☐ Deliverables

7. RED FLAGS

☐ Guaranteed return
☐ Guaranteed liquidity
☐ “No-risk” investment
☐ Pressure to invest immediately
☐ Missing offering documents
☐ Unclear ownership
☐ Unclear investor rights
☐ Unexplained related-party transactions

FINAL QUESTION

Can I explain exactly what security I am buying, what rights it gives me, what can dilute those rights, and how I can realistically get my money back?