RegA+ Red Flags: What Every Investor Must Watch For

By Oscar A. Jofre
Global leader in private capital markets, architect of 100% compliant infrastructure, and unwavering advocate for investor protection.

Raising capital under Regulation A+ is no longer a novelty or startup side hustle. With the ceiling now set at $75 million, Reg A+ has entered a new era—one that demands maturity, structure, and full compliance. This is not a regulatory shortcut. It is a privilege, not a right. That privilege must be earned by companies, respected by service providers, and protected by investors.

Yet, too many offerings still cut corners—either from ignorance or intentional evasion—and in doing so, jeopardize the credibility of the entire private capital ecosystem. That’s not just unethical—it’s dangerous.

As someone who has been deeply embedded in the evolution of private capital markets and the development of compliance infrastructure, I’m sounding the alarm. Below are the three most critical red flags every investor must look for when evaluating a Reg A+ offering. If you don’t see these listed clearly and transparently on the offering’s website, walk away.

🚩 Red Flag #1: No FINRA-Registered Broker-Dealer

If the offering does not have a FINRA-registered broker-dealer involved, stop right there.

A legitimate Reg A+ offering must be backed by a broker-dealer that is registered not only with FINRA but also in all applicable U.S. states—ideally, all 50 states and territories. Some states require this by law.

The excuse that “broker-dealers are too expensive” is an outdated myth. A properly structured Reg A+ raise incorporates the cost of regulatory compliance as part of doing business the right way. Broker-dealers are not optional—they are your first line of defense in ensuring:

• Proper Know Your Customer (KYC) and Anti-Money Laundering (AML) checks
• Accredited and non-accredited investor vetting
• Funds allocation and monitoring
• Prevention of fraud or mismanagement

Without a FINRA broker-dealer, investors are exposed. Period.

🚩 Red Flag #2: No Third-Party U.S. Bank Escrow

Let’s follow the money—literally.

A compliant Reg A+ raise routes investor funds through a third-party U.S.-based escrow account, typically managed by a U.S. bank that works in tandem with the broker-dealer. This is non-negotiable.

Whether the investment is made via credit card, ACH, wire transfer, or IRA rollover, the funds must be held in escrow until certain conditions are met (like minimum raise thresholds). This protects both the issuer and the investor.

If you don’t see the name of the U.S. escrow bank listed prominently on the offering site, or the escrow process is vague or omitted entirely—you have your answer.

No third-party escrow = No safeguards = No investment.

🚩 Red Flag #3: No SEC-Registered Transfer Agent

Ownership of securities is not just a promise—it’s a legal record.

A compliant Reg A+ offering is required to use a SEC-registered transfer agent. Why? Because these professionals maintain the shareholder ledger, process ownership updates, ensure proper distributions, and serve as a neutral third-party custodian of investor records.

Without a transfer agent, what happens when:

• Dividends are issued?
• The company goes public or gets acquired?
• You need to prove ownership for secondary trading?

If your investment isn’t properly recorded by a registered transfer agent, it could be erased, mishandled, or misrepresented. In today’s Reg A+ landscape, no transfer agent means no transparency—and without transparency, there is no trust.

Why This Matters More Than Ever

The Reg A+ ecosystem is no longer operating in the shadows. It’s mainstream, and investors—from individual retail to RIAs to institutional players—are entering with serious capital. But here’s the truth:

IRA custodians, registered investment advisors (RIAs), and institutional gatekeepers will not invest in offerings that lack the three pillars:
Broker-dealer, Escrow provider, and Transfer agent.

Without them, there’s no proper due diligence, no bad actor checks, and no accountability in where the money flows or how shares are tracked.

This is why we must raise the bar—not lower it.

The Bottom Line: Compliance Is Not Optional

If you’re raising capital using Reg A+, you’re asking the public to trust you with their hard-earned money. That means you must earn that trust with structure, regulation, and transparency. The days of “figure-it-out-later” capital raising are over.

If you’re an investor, remember this: Reg A+ is a powerful tool—but only when used responsibly. And the responsibility lies in ensuring the offering you’re considering includes:

✅ A FINRA-registered Broker-Dealer
✅ A third-party U.S. Bank Escrow Account
✅ An SEC-registered Transfer Agent

If any one of these elements is missing, do not justify it. Do not negotiate. Do not invest.

Closing Words from Oscar A. Jofre

The credibility of private markets depends on all of us—issuers, platforms, regulators, and investors—holding each other to a higher standard. I’ve dedicated my life to building a world where private capital can flow freely but also compliantly, with investor protections embedded into the infrastructure itself.

Let’s not allow a few bad actors to erode what we’ve worked so hard to build.

Reg A+ is growing up. It’s time we all did too.