Q: I invested in a private company. After waiting and wiring the funds, I then got a cancelled email due to the questionnar
I was told my deal may have been cancelled due to the questionnaire. I researched the company, had to use the third party platform to invest, waited for 3 months on the waitlist, wired the funds, and then got an email stating my investment was being cancelled. How can this happen? I want in on this deal, and a questionnaire determines the right for me to participate? Shouldn't this been told to me while I waited on the waitlist? What can be done about this? This company is going to go public and this is such an unjustice to me because of questions?
A:
It sounds like you are attempting to purchase unregistered shares of a company that is supposedly going public in the future. Sellers of unregistered securities are only allowed to sell to accredited investors, who are deemed financially sophisticated enough to bear the risks. This is what your questionnaire is used for, to determine whether you are an "accredited investor." Accredited investors are allowed to buy and invest in unregistered securities as long as they satisfy one (or more) requirements regarding income, net worth, asset size, governance status, or professional experience.
Unregistered securities are considered inherently riskier because they lack the normal disclosures that come with SEC registration. You should be EXTREMELY CAREFUL if you are planning to purchase unregistered securities. Being denied the ability to buy these shares might be the best thing that could happen to you. You can purchase these shares and they can easily become worthless for a number of reasons. I HIGHLY recommend that you discuss this potential investment with a financial advisor who is fiduciary.
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