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Bad Actor Disqualification Review

Complete Rule 506(d) Bad Actor Reviews in Minutes

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 entire Rule 506(d) diligence process for private securities offerings. From identifying every covered person across complex ownership chains to generating tailored questionnaires and building a defensible reasonable-care record, this skill transforms a high-stakes compliance exercise into a streamlined, thorough workflow.

A single overlooked disqualifying event involving any covered person can eliminate the Rule 506 exemption, trigger rescission rights, and expose issuers to enforcement actions. The covered persons net is broader than most practitioners realize — capturing specific individuals at broker-dealers, promoters, and beneficial owners — and lookback periods vary by event category. Manual screening is time-intensive, error-prone, and often fails to produce the defensible record needed for a reasonable-care defense.

CaseMark automates the entire Rule 506(d) diligence workflow, systematically identifying all covered persons, generating category-specific questionnaires, and producing a structured reasonable-care record. When potential disqualifying events are flagged, the AI classifies them against the correct lookback periods and provides specific remediation pathways or disclosure recommendations, ensuring your offering maintains its exemption on a defensible foundation.

How it works

  1. 1. Upload your offering documents, organizational records, and personnel information

  2. 2. AI identifies all covered persons across the full beneficial ownership chain and solicitation arrangements

  3. 3. Review the generated questionnaires, event classifications, and diligence record

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

What you get

  • Covered Persons Register

  • Tailored Bad Actor Questionnaires

  • Reasonable-Care Diligence Record

  • Disqualifying Event Classification Analysis

  • Remediation & Disclosure Recommendations

What it handles

  • Comprehensive covered persons register with beneficial ownership chain mapping

  • Tailored questionnaires mapped to each disqualifying event category

  • Documented reasonable-care diligence record for defensible compliance

  • Classification analysis of flagged events with lookback period tracking

  • Remediation pathways and disclosure recommendations for identified issues

  • Support for both Rule 506(b) and 506(c) offering structures

Required documents

  • Offering Documents & Cap Table

    Term sheets, PPMs, cap table with full beneficial ownership chains, voting agreements, and convertible instruments

    .pdf, .docx, .xlsx

  • Organizational Documents

    Charter, bylaws, operating agreement, and board consents establishing governance structure

    .pdf, .docx

  • Personnel & Solicitation Records

    Officer/director lists with full legal names and roles, placement agent and finder agreements, and personnel identifiers (DOB, registrations, aliases)

    .pdf, .docx, .xlsx

Supporting documents

  • Prior Form D Filings

    Previously filed Form D submissions for the issuer or affiliated entities

    .pdf, .docx

  • Known Enforcement History

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

    .pdf, .docx

  • Promoter Arrangements

    Agreements or documentation relating to persons who founded, organized, or received compensation in connection with founding the issuer

    .pdf, .docx

Why teams use it

Eliminate the risk of missing covered persons hidden in complex beneficial ownership chains, voting agreements, and solicitation arrangements

Build a documented reasonable-care defense that withstands regulatory scrutiny with structured diligence records

Reduce 506(d) review time from days to minutes while increasing thoroughness and consistency across offerings

Receive actionable remediation recommendations and disclosure language when disqualifying events are identified

Questions

What disqualifying events does this review cover?

CaseMark's review covers all Rule 506(d) disqualifying event categories, including criminal convictions, SEC disciplinary orders, cease-and-desist orders, SRO sanctions, state regulatory actions, SEC stop orders, and U.S. Postal Service false representation orders. Each category is mapped with its specific lookback period.

How does CaseMark identify all covered persons?

CaseMark analyzes your cap table, organizational documents, and solicitation arrangements to identify every covered person — including individual solicitors at broker-dealers, promoters under the Rule 405 definition, and beneficial owners with 20%+ voting power. The analysis goes beyond entity-level screening to capture the individuals the rule actually targets.

Does this produce a defensible reasonable-care record?

Yes. CaseMark generates a structured reasonable-care diligence record documenting the steps taken, sources consulted, and conclusions reached for each covered person. This record is designed to support a reasonable-care defense if a disqualifying event is later discovered.

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

Absolutely. CaseMark tailors the review based on your specific offering type, whether Rule 506(b) or 506(c), and accounts for staged closing schedules and expected sale dates that affect lookback period calculations.

What happens if a disqualifying event is flagged?

When CaseMark identifies a potential disqualifying event, it provides a detailed classification analysis along with specific remediation pathways — including waiver applications, pre-existing authority exceptions, and required disclosure language under Rule 506(e) for events that fall outside the disqualification window.

How long does the AI analysis take?

CaseMark typically completes a full Rule 506(d) review in approximately 10-15 minutes, depending on the complexity of the ownership structure and number of covered persons. This replaces what traditionally takes hours or days of manual diligence work.

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