The term “PPM” (Private Placement Memorandum) is the key here. Because a PPM is specifically designed for a private offering, you generally cannot sell to the “public” in the way most people imagine (e.g., posting on Facebook, running TV ads, or selling to anyone who walks by).
Here is the breakdown of what you can and cannot do once your PPM is ready.
1. Can you sell it yourself?
Yes. You do not strictly need a stockbroker to sell your own company’s shares. You (the founder or officer) can approach investors directly. However, there are two massive legal hurdles:
- The “Issuer Exemption”: You can sell your own stock without a broker license only if you aren’t being paid a commission for the sale and you don’t spend all your time selling securities.
- The “Porthole” (SEC Filing): Even if you don’t use a broker, you must still file Form D with the SEC within 15 days of your first sale to notify them that you are using a private exemption.
2. Can you sell to the “Public”?
Usually, No. Most PPMs are written under Rule 506(b) or Rule 506(c) of Regulation D. Your ability to talk to the public depends on which one you chose:
- Rule 506(b) [Most Common]: You cannot use “General Solicitation.” This means no public advertising. You can only sell to people with whom you have a “pre-existing substantive relationship” (friends, family, or business associates).
- Rule 506(c): You can advertise to the public (social media, billboards, etc.), but you can only actually accept money from Accredited Investors (people making $200k+ a year or with $1M+ net worth). You are legally required to verify their bank statements or tax returns before taking their money.
Comparison: Private vs. Public
| Feature | Private Placement (PPM) | Public Offering (IPO/Reg A+) |
|---|---|---|
| Who can buy? | Mostly Accredited Investors | Anyone (The General Public) |
| Advertising? | Only if using Rule 506(c) | Yes |
| SEC Review? | No (they just get a notice) | Yes (heavy scrutiny) |
| Resale? | Stock is “Restricted” (held for 6–12 months) | Stock is “Liquid” (sellable immediately) |
The “Broker” Warning
If you hire a “finder” or a friend to help you sell the stock and you pay them a success fee or commission, they must be a licensed broker-dealer. If they aren’t, the SEC can shut you down, and investors can legally demand their money back years later (Right of Rescission), even if the business is doing well.
Important Distinction: PPM vs. Registration
If you want to sell to the actual general public without the “Accredited Investor” restriction, a PPM isn’t enough. You would need to move into Regulation A+ (the “Mini-IPO”) or a full S-1 Registration. These require the SEC to “qualify” or “approve” your documents before you can take a single dollar.
Would you like me to check the specific requirements for a “Mini-IPO” (Reg A+) if you’re looking to reach non-accredited investors?