Purchase Instructions, Processing, and Confirmation
From Subscription to Settlement
The subscription agreement is the customer's offer to buy; the issuer accepts it at closing. Alongside it sits the accredited investor questionnaire and, in a 506(c) offering, verification documentation - tax returns, bank or brokerage statements, a written confirmation from a CPA or attorney, or a third-party verification service. In a 506(b) offering the issuer needs only a reasonable belief, which the questionnaire typically supports.
Watch the mechanics. In a contingency offering with a minimum and maximum, investor funds go into escrow under Rule 15c2-4 and are returned promptly if the minimum is not met; Rule 10b-9 governs representations about the terms. The Form D notice is due to the SEC within 15 days of the first sale, and FINRA Rule 5123 requires the member firm to file private placement materials with FINRA within 15 days of the first sale. State blue-sky notice filings follow.
Confirmations must comply with Rule 10b-10, showing the security, the firm's capacity, the price, and the restricted status of the securities. Settlement may be delivery-versus-payment, and physical certificates bear the Rule 144 legend.
Traps: treating Form D as an application for approval; assuming a late Form D automatically voids the current offering (it is a notice filing, though repeated failure can affect future 506 reliance); believing a self-certification satisfies 506(c) verification.
Worked example: A customer wires funds before the minimum is reached. The money must be held in a segregated escrow account and not delivered to the issuer until the contingency is satisfied.