WHY USE ESCROW FOR REGULATION D?

There are a number of reasons why you might choose to use an escrow account on a Reg D offering. First, if you use a broker-dealer on a contingent offering, the Securities Exchange Act requires that an escrow account be used to hold investor funds until the contingencies are satisfied. There are specific regulatory requirements surrounding how investor funds are held and who is authorized to hold the funds while raising capital for such an offering. Second, escrow accounts can be used by issuers to reassure investors about the viability of their business, even if there is no contractual contingency associated with an offering. Escrow accounts provide an extra level of protection for investors and for issuers by allowing an authorized third party to safely hold investor funds while the offering is in progress. Issuers have the ability to call funds from the investor and escrow the subscriptions while all necessary paperwork and compliance checks are being performed, including accreditation verification. In case of an unsuccessful offering, the escrow sponsor promptly returns funds to investors.

North Capital Private Securities is a custodial broker-dealer that can serve as a qualified escrow sponsor under SEA Rule 15c2-4. The entire escrow process is integrated with our technology services (link to technology page) to simplify communication, fund flows, and record-keeping. We have streamlined the process with electronic documents and real-time reporting through our Admin Panel. Key benefits of working with North Capital as escrow sponsor include the white glove service we provide, real-time escrow reporting and visibility, and partnering with a company that has a long track record and depth of expertise with escrow for private offerings.