Due Diligence in Alternative Investment and Private Placement

Evaluating any investment requires an investigation of information by the investor to achieve an understanding of the balance between risk and reward.  In evaluating alternative investments, our attorneys can assist with an investigation of the key aspects of the investment. Hornstine Law LLC possesses the experience, expertise, and resources to develop a comprehensive evaluation before you decide to invest in your next alternative investment or private placement transaction.

Alternative investments are non-traditional investments in assets other than stocks or bonds trading on a recognized market.  Most alternative investment assets are held by institutional investors or accredited, high-net-worth individuals because of their complex nature, limited regulatory oversight, and relative lack of liquidity.  Alternative investments include hedge funds, managed futures, real estate, commodities and derivatives contracts.  Many alternative investments also have high minimum investments and fee structures compared to mutual funds or Exchange-Traded Funds (ETFs).  As these investments are subject to less regulation, they also have less opportunity to publish verifiable performance data and advertise to potential investors.  Alternative investments are favored mainly because their returns have a low correlation with those of publicly traded stocks and bonds. Private placements, generally describe offerings of securities that are not registered with the Securities and Exchange Commission.   Most alternative investments are through private placement and are therefore exempt from registration.  Likewise, investments of stocks and bonds in newer or smaller companies are typically also offered to prospective investors in a private placement.

Similar to alternative investments, private placements generally lack readily available information about the Company or fund constituting the offering.  As a result, the investor is faced with limited information to evaluate the risk and return.  Due to the nature and size of the investment, the investor bears a much greater responsibility to obtain sufficient information to make an informed decision about the risks and potential returns of any alternative investments.  With over 30 years of structuring, marketing and distributing various types of alternative investments, our team of professionals at Hornstine Law have developed a process to collect essential information, evaluate the disclosure of risks and advise investors on the balance of risks and rewards.  At the conclusion of our review, we provide the investor with a detailed report with a recommended course of action.

Overview of Due Diligence Process

The law imposes a greater obligation on investors involved in a private placement to investigate the essential facts concerning an investment. Each investment represents unique risks, characteristics and factors affecting each investment that may require additional avenues of investigation. 

Due Diligence Services

Our due diligence process consists of collecting information concerning the organization of the entity or fund, the investment policy of any fund, disclosure of the risks, the infrastructure of the fund including the custody of the investor funds, background of key management, and administration of the investment.  Finally, our legal staff will review the legal proceedings or litigation involving the sponsor or issuer.

At the law offices of Hornstine Law, LLC, we represent individuals and businesses in Pennsylvania, New Jersey, New York, and Florida. We bring decades of legal experience, including more than 20 years of judicial experience and more than 30 years of securities regulation experience. We take an aggressive stance on behalf of our clients and will treat your investment as if it were our own.

To set up a free initial consultation, contact our office by e-mail or for assistance in Pennsylvania and New York call our office at 215-568-4968, for assistance in New Jersey call our office at 609-523-2222, and for assistance in Florida, call our office at 727-538-4178. Evening and weekend meetings can be scheduled at your request.