Preexisting Substantive Relationship

An issuer or an agent acting on the issuer’s behalf, including, for example, a placement agent, may have a preexisting substantive relationship with prospective investors, meaning that the relationship pre-dates the specific contemplated offer of securities and that the issuer or its agent have established a relationship with the prospective investor as a result of which they have assessed the investor’s sophistication, status, ability to bear risk, etc.  Communications with investors with whom the issuer or its agent have a pre-existing substantive relationship would not be considered to be a “general solicitation.”

Featured definitions