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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 complex Rule 506(d) screening process required for private securities offerings under Regulation D. The skill produces a complete diligence package including a covered persons register, tailored questionnaires, documented reasonable-care records, and actionable remediation recommendations for any flagged disqualifying events.

A single overlooked disqualifying event involving any covered person can eliminate the Rule 506 exemption, unwind an entire offering, and trigger rescission rights across all investors. The covered persons net is broader than most practitioners realize — extending to specific individuals at broker-dealers, promoters, and beneficial owners — and manually tracking lookback periods, drafting tailored questionnaires, and documenting reasonable care across dozens of participants is time-intensive and error-prone.

CaseMark automates the entire Rule 506(d) diligence workflow, from identifying every covered person in the offering chain to generating category-specific questionnaires and building a documented reasonable-care record. When potential disqualifying events are flagged, CaseMark classifies them against the applicable statutory categories and lookback periods, then provides specific remediation pathways and disclosure recommendations so counsel can act decisively.

How it works

  1. 1. Upload offering documents, organizational records, and covered persons information

  2. 2. AI identifies all covered persons and maps disqualifying event categories with applicable lookback periods

  3. 3. Review the generated register, questionnaires, and flagged event classifications

  4. 4. Export the complete diligence 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 analysis

  • 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 flagged issues

  • Rule 506(b) vs. 506(c) offering-specific analysis

Required documents

  • Offering & Organizational Documents

    Charter, bylaws, operating agreements, PPM, subscription agreements, and board consents establishing the offering structure

    .pdf, .docx

  • Covered Persons Information

    Officer/director lists, cap tables, beneficial ownership chains, placement agent and finder agreements, and per-person identifiers

    .pdf, .docx, .xlsx

  • Prior Filings & Enforcement History

    Prior Form D filings, known enforcement actions, regulatory orders, and any previously completed bad actor questionnaires

    .pdf, .docx

Supporting documents

  • Voting Agreements & Convertible Instruments

    Voting agreements, convertible notes, warrants, and super-voting stock documentation for accurate voting power calculations

    .pdf, .docx

  • Promoter Compensation Arrangements

    Agreements or records showing compensation paid in connection with founding or organizing the issuer

    .pdf, .docx

  • FINRA/SEC Registration Records

    BrokerCheck reports, Form BD filings, or CRD records for registered individuals and entities

    .pdf, .docx

Why teams use it

Eliminate the risk of missed covered persons with comprehensive beneficial ownership and solicitation chain analysis

Build a defensible reasonable-care record that protects the offering if a disqualifying event surfaces post-closing

Reduce hours of manual questionnaire drafting with AI-generated questionnaires tailored to each disqualifying event category

Receive actionable remediation and disclosure recommendations for flagged events, including waiver pathways and Rule 506(e) disclosure guidance

Questions

What types of disqualifying events does this review cover?

CaseMark's bad actor review covers all Rule 506(d) disqualifying event categories, including criminal convictions, SEC disciplinary orders, cease-and-desist orders, SRO sanctions, state regulatory actions, 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 arrangements to build a comprehensive covered persons register. This includes not just entity-level participants but specific individuals at broker-dealers and placement agents who are involved in solicitation activities.

Does this produce a defensible reasonable-care record?

Yes. CaseMark generates a documented reasonable-care diligence record that demonstrates the steps taken to identify and screen covered persons. This structured 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 analysis based on whether your offering is conducted under Rule 506(b) or 506(c), accounting for differences in solicitation methods and the specific covered persons implicated by each offering type.

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 recommendations under Rule 506(e).

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 and lookback periods. 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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