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Bad Actor Disqualification Review

Rule 506(d) Bad Actor Reviews in Minutes, Not Hours

12 minutes with CaseMark

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Bad Actor Disqualification Review

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Bad Actor Disqualification Review

Overview

CaseMark's Bad Actor Disqualification Review automates the complex Rule 506(d) diligence process for private securities offerings. The AI builds a comprehensive covered persons register, generates tailored questionnaires for each disqualifying event category, and produces a documented reasonable-care diligence record that serves as a defensible compliance package.

A single overlooked disqualifying event involving any covered person can eliminate the Rule 506 exemption and NSMIA preemption across all 50 states, triggering rescission rights and potential enforcement actions. The covered persons net is broader than most practitioners realize, lookback periods vary by event category, and manual screening across SEC, FINRA, and state databases is time-intensive and error-prone.

CaseMark automates the entire Rule 506(d) diligence workflow—from covered persons identification through event classification and remediation analysis. The AI maps complex ownership structures, generates category-specific questionnaires, and produces a documented reasonable-care record, transforming what typically takes days of manual work into a structured, defensible compliance package.

How it works

  1. 1. Upload your offering documents, cap table, officer/director lists, and solicitation agreements

  2. 2. AI identifies all covered persons and maps beneficial ownership chains across the offering structure

  3. 3. Review the generated questionnaires, event classifications, and flagged disqualifying events

  4. 4. Export your complete 506(d) diligence package in your preferred format (DOCX, PDF)

What you get

  • Covered Persons Register

  • Tailored Bad Actor Questionnaires

  • Disqualifying Event Classification Analysis

  • Reasonable-Care Diligence Record

  • Remediation & Disclosure Recommendations

What it handles

  • Comprehensive covered persons register with beneficial ownership mapping

  • Tailored questionnaires mapped to each disqualifying event category

  • Documented reasonable-care diligence record for defensible compliance

  • Classification analysis of flagged events with severity assessment

  • Remediation and disclosure recommendations for identified issues

  • Lookback period tracking across all event categories

Required documents

  • Offering Documents

    Private placement memorandum, term sheet, or offering summary including Rule 506(b) or 506(c) designation

    .pdf, .docx

  • Cap Table & Organizational Documents

    Full beneficial ownership records, charter/bylaws, operating agreements, voting agreements, and convertible instrument schedules

    .pdf, .docx, .xlsx

  • Officer, Director & Promoter Information

    Full legal names, roles, involvement descriptions, and personal identifiers for all officers, directors, and promoters

    .pdf, .docx, .xlsx

Supporting documents

  • Solicitation Agreements

    Placement agent, finder, broker-dealer, and portal agreements identifying individuals involved in solicitation

    .pdf, .docx

  • Prior Form D Filings

    Previously filed Form D submissions for the issuer or related entities

    .pdf, .docx

  • Known Enforcement History

    Any known SEC orders, SRO sanctions, state regulatory actions, or criminal records involving covered persons

    .pdf, .docx

Why teams use it

Eliminate the risk of missed covered persons with AI-powered beneficial ownership mapping that goes beyond equity percentages to capture voting power, convertible instruments, and individual-level broker-dealer analysis

Generate questionnaires precisely tailored to each disqualifying event category with correct lookback periods, replacing generic templates that miss critical screening areas

Build a defensible reasonable-care record automatically, documenting every diligence step taken for each covered person in a format ready for regulatory scrutiny

Receive actionable remediation recommendations—including waiver applications, disclosure obligations, and pre-existing authority exceptions—when disqualifying events are flagged

Questions

What types of disqualifying events does this review cover?

CaseMark's bad actor review covers all eight categories of disqualifying events under Rule 506(d), including criminal convictions, SEC disciplinary orders, court injunctions, SRO sanctions, state regulatory orders, SEC cease-and-desist orders, SEC stop orders, and USPS false representation orders. Each category is analyzed with its specific lookback period.

How does CaseMark identify all covered persons for my offering?

CaseMark analyzes your cap table, organizational documents, officer/director lists, and solicitation agreements to identify every covered person—including the issuer, directors, officers, 20%+ beneficial owners, promoters, placement agents, and the specific individuals at broker-dealers involved in solicitation. The AI maps beneficial ownership chains including voting agreements and convertible instruments.

Can this help establish a reasonable-care defense?

Yes. CaseMark generates a documented reasonable-care diligence record that demonstrates the steps taken to verify each covered person's status. This structured record is designed to support a factual impossibility or reasonable-care defense under Rule 506(d)(2) if a disqualifying event is later discovered.

Does this handle both Rule 506(b) and 506(c) offerings?

Absolutely. CaseMark tailors the analysis based on whether your offering is conducted under Rule 506(b) or 506(c), accounting for differences in solicitation scope and the corresponding covered persons universe. The questionnaires and diligence steps are adjusted accordingly.

What if a disqualifying event is identified?

When CaseMark flags a potential disqualifying event, it provides a classification analysis with severity assessment and recommends specific remediation pathways—including SEC waiver applications, pre-existing authority exceptions, and mandatory disclosure requirements under Rule 506(e). You receive actionable next steps, not just a red flag.

How current is the regulatory framework used in the analysis?

CaseMark's analysis is built on the current Rule 506(d) framework, including all disqualifying event categories, lookback periods, and relevant SEC guidance. However, you should always verify flagged events against live SEC, FINRA, and state regulatory databases as part of your independent verification process.

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