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

Who represents the needs of a non-accredited investor in a private placement?

1. Purchaser representative

2. Investment adviser

3. Underwriter

4. Broker-dealer

The correct answer is: Purchaser representative

In the context of private placements, a purchaser representative is specifically designated to advocate for the interests of non-accredited investors. This type of investor typically has lower income or net worth compared to accredited investors, thus lacking the same level of experience or capital to engage in high-risk securities transactions. A purchaser representative assists in evaluating the investment opportunity, ensuring the terms and risks are conveyed appropriately, and that the investor's needs and preferences are prioritized throughout the transaction process. This role is crucial as it mitigates the potential for biases that may arise in negotiations or in the presentation of the investment proposal, as the representative acts as a trusted advisor. Additionally, while investment advisers, underwriters, and broker-dealers also serve important functions in the financial markets, they do not typically serve the specific purpose of representing non-accredited investors in private placements. Thus, the purchaser representative is uniquely suited to fulfill this role.