1. (a) In addition to the objective standards of suitability set forth in Section 260.140.123.2, it will be the responsibility of the sponsor and each person selling units to make every reasonable effort to see that such securities are an appropriate investment for the participants.
2. (b) Persons selling units shall specifically ascertain by means of a writing that the offering is appropriate for each participant. In doing so, such persons must determine that each participant or his representative has the capacity to understand the fundamental aspects of the program.

3. (c) Persons selling units shall also, ascertain by means of a writing that the participants understand (when applicable):

   1. (1) the risks involved in the offering, including the speculative nature of the investment;
   2. (2) the financial hazards involved in the offering, including the risk of losing their entire investment;
   3. (3) the lack of liquidity of units;
   4. (4) the restrictions on transferability of units;
   5. (5) the background and qualifications of the sponsor and/or the manager or persons responsible for the offering; and
   6. (6) the tax consequences of the investment.
4. (d) All of the requirements of this section may be satisfied by the use of the same writing filed with and not disapproved as to form by the Commissioner and properly executed by each participant.

Note: Authority cited: Section 25610, Corporations Code. Reference: Section 25140, Corporations Code.

History

1. Editorial correction adding Note filed 11-8-82 (Register 82, No. 46).