Purchase Instructions, Processing, and Confirmations
From signature to settlement
A DPP purchase is completed with a package, not a ticket. The investor signs a subscription agreement, a purchaser questionnaire, and - in private placements - an accredited investor certification or a representation of sophistication. The representative verifies that the investor's financial information is complete, that the investment fits the suitability standard, and that the subscription amount meets the program minimum. Never pre-sign, back-date, or fill in a blank questionnaire on the customer's behalf.
Funds handling is heavily tested. Under FINRA Rule 15c2-4, subscription funds in an offering subject to a minimum contingency must be deposited in a separate escrow or impound account and may not be commingled with the firm's or the issuer's operating money; if the minimum is not raised, funds are returned promptly. Checks are made payable to the escrow agent or the issuer - never to the representative. The offering must be registered or exempt in the purchaser's state, and Form D is filed with the SEC within 15 days of the first sale in a Regulation D offering. Delivery of a prospectus or private placement memorandum precedes or accompanies the subscription; in a public offering the prospectus must reach the customer before the confirmation is sent.
After the contingency is met, the sponsor closes, units are issued, and a confirmation is delivered disclosing the amount invested, the price, the representative's compensation, and the issuer's capacity. Until closing, the investor is not a limited partner - do not tell a client otherwise.
Trap: Depositing subscription checks into the firm's bank account "to hold until closing." That violates the escrow requirement even if every dollar is later forwarded.
Rule of thumb: Money goes to the escrow agent or issuer, paperwork goes to the file, and nothing is promised until the closing is confirmed.