| name | bad-actor-disqualification-review |
| title | Bad Actor Disqualification Review (Rule 506(d)) |
| description | Produces a Rule 506(d) bad actor disqualification review for private securities offerings, including a covered persons register, tailored questionnaires mapping to each disqualifying event category, a documented reasonable-care diligence record, and classification analysis of flagged events with remediation or disclosure recommendations. Use this skill when conducting Rule 506(d) diligence, identifying covered persons for a Regulation D offering, drafting bad actor questionnaires, or analyzing potential disqualifying events involving criminal convictions, SEC orders, SRO sanctions, or state regulatory actions. Also trigger when the user mentions bad actor screening, covered persons analysis, Rule 506(d) questionnaire, disqualification waiver, or reasonable care defense. Even if the user just says "bad actor check" or "506(d) diligence," use this skill. |
| author | CaseMark |
| author_url | https://github.com/CaseMark/skills/tree/main/skills/legal/bad-actor-disqualification-review |
| license | Apache-2.0 |
| version | 0.1.0 |
| execution_mode | open |
| jurisdiction | us |
| practice | capital-markets |
| language | en |
| tags | ["analysis","checklist","corporate","drafting","memo","regulatory"] |
Bad Actor Disqualification Review (Rule 506(d))
Why This Skill Exists
A single disqualifying event involving any covered person eliminates the Rule 506 exemption — and with it, NSMIA preemption across all 50 states. This is not a theoretical risk: offerings have been unwound, rescission rights have been triggered, and issuers have faced enforcement actions because bad actor screening was treated as a checkbox exercise rather than a defensible diligence process. The covered persons net is broader than most practitioners realize (it catches specific individuals at broker-dealers, not just entities), and the lookback periods vary by event category.
This skill executes a structured reasonable-care review that builds a defensible record: covered persons register, tailored questionnaires, independent verification, event classification, and remediation pathways.
Checkpoint A: Pre-Draft Intake (Mandatory)
Ask every time unless the user says "use defaults" or "just draft." Gather:
- Offering perimeter — Rule 506(b) vs. 506(c), expected sale date(s), staged closing schedule
- Cap table — full beneficial ownership chains, voting agreements, convertible instruments, super-voting stock; sufficient to calculate voting power (not just equity %)
- Organizational documents — charter/bylaws or operating agreement, board consents
- Officer/director list — full legal names, roles, description of involvement in investor-facing activities
- Promoter arrangements — any person who founded/organized the issuer or receives compensation in connection with founding (Rule 405 definition)
- Solicitation arrangements — placement agent, finder, broker-dealer, and portal agreements; identify the specific individuals soliciting, not just the firm entity
- Prior Form D filings and known enforcement history
- Per-person identifiers — full legal name, aliases, DOB, current/prior addresses, FINRA/SEC registrations
If the user doesn't respond, apply and clearly label these defaults: all persons meeting Rule 506(d)(1) categories included; err toward inclusion for borderline covered persons; all lookback periods applied from expected first sale date.
If screening identifiers are unavailable for any covered person, propose a risk-based path (remove from covered role, restructure, delay) before proceeding.
Step 1: Build Covered Persons Register
Map each person/entity to their Rule 506(d)(1) category. Update at every material deal change.
