DISCLOSURE REQUIREMENTS FOR PRIVATE PLACEMENT OFFERINGS,

DISCLOSURE REQUIREMENTS FOR PRIVATE PLACEMENT OFFERINGS,

EXEMPT FROM REGISTRATION

Summaries of SEC interpretations & court decisions dealing with Section 4(2). "Basic requirements for private placements".

All of the offerees must have access to meaningful current information concerning the issuer (i.e. the partnership). The fact that an offeree has considerable financial resources or is a lawyer, accountant or business person, & thus may be considered sophisticated, does not obviate the need for appropriate information to be made available!

Regulation D in no way relieves issuers of their obligation to furnish investors whatever materiel information may be needed to make any required disclosures not misleading. (SEC interpretation 1992)

SEC vs. Ralston Purina Co. 346 U.S. 119 (1953) "Private offering exemption for employees would exist only to the extent that the employees had access to substantially the same information concerning the issuer which registration would provide and who are able to fend for themselves."

All offerees & purchasers must have access to the same kind of information concerning the issuer which would appear in an SEC registration statement; these persons must be able to comprehend & evaluate such information. (It must be kept in mind that any offer to an offeree who would not qualify, as well as any sale to a purchaser who would not qualify, may destroy the private placement exemption and result in a vio-lation of Section 5 of the Securities Act.)

The issuer and any parties acting for the issuer, including the Broker-Dealer, must take all reasonable steps to insure that the information given to offerees & purchasers is COMPLETE & ACCURATE. This is "due diligence". All information passed on in the course of the private placement, either orally or by memorandum (or offering circular) is subject to the anti-fraud provisions of the Federal Securities laws.

The fact that an offering memorandum is not reviewed by the SEC does not lower the standards for accuracy which would be applicable to any registered offering.

What is readily apparent from the foregoing is that current and accurate information about the offerees in a private placement transaction is absolutely essential for the making of judgments as to suitability, ability to evaluate an offering & investment and investment intent!

ACCREDITATION IS NO SUBSTITUTE FOR DISCLOSURE. In other words, just because an investor is accredited (sophisticated, rich and smart), the requirement and need for full disclosure is still very apparent! An offering to accredited investors is exempt from registration, not disclosure.

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