Private placements are illiquid investments which means there’s no active market for them and they really they really can’t be resold. What you’re effectively buying is an unregistered security. The federal laws permit the sale of private placements however they’re subject to very strict guidelines. Income levels many private placements require a certain number of accredited investors for example being someone whose net worth is in excess of a million dollars exclusive of their residential premises and/or income of $200,000 over the past two years and the problem with private placements is that they’re very risky and oftentimes they’re pitched to individuals who can’t afford the loss or the illiquidity. Think about it if you put money into an investment that can’t be resold why would you buy it in the first place?
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