Future Business Leaders of America (FBLA) Securities and Investments Practice Test

What is the main role of a purchaser representative in a private placement?

1. To advise the issuer

2. To represent non-accredited investors

3. To manage selling efforts

4. To communicate with regulatory bodies

The correct answer is: To represent non-accredited investors

The main role of a purchaser representative in a private placement is to represent non-accredited investors. This function is essential because non-accredited investors often need guidance and support to understand the complexities of private investments, which may not be as accessible to them compared to accredited investors. The purchaser representative acts as an intermediary, ensuring that these investors receive adequate information and that their interests are protected during the investment process. By representing non-accredited investors, the purchaser representative plays a critical role in upholding the principles of fairness and transparency in private placements. This representation is vital in ensuring that these investors have the necessary backing to participate in opportunities that they might not fully understand, thus fostering a more equitable investment environment. The focus on non-accredited investors highlights the importance of safeguarding those who may have less experience or resources compared to accredited investors.