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2 Technology Tools Securities Attorneys Can Recommend to Issuer Clients

Post on: September 11, 2018 | Chris Rohde | 0

Group of business people brainstorming together in the meeting room

Last month, WealthForge hosted a round table in Richmond, VA with local business and securities attorneys to discuss the emerging trend of electronic signatures and subscription automation in non-publicly traded securities transactions.

Electronic Signatures

Electronic signature technology allows subscription documents to be sent securely via email, where investors can then review, fill out, and provide an electronic signature without the need to print or receive a paper document through mail or fax.

When asked about the use of electronic signatures by their clients, attorneys who attended the meeting reported a spectrum of levels of acceptance. In some cases, their clients routinely use electronic signatures. In other cases – particularly in the commercial real estate realm – electronic signatures have yet to be adopted.

As more investment offerings move away from paper-processes, we expect electronic signature technology to become an essential tool for issuers of private securities. We hope that these discussions continue and issuers and their counsel continue to warm to electronic signatures and the benefits they provide.

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Subscription Automation

The group next discussed the rising trend of subscription automation. Much like electronic signature technology, subscription automation enables issuers to eliminate paper-processes. Using this technology, issuers can collect investor information through online workflows. This process has been proven to reduce both the time required to submit an investment and the rate of errors on subscription documents.

Based on feedback we have received from our clients and other large sponsors of private real estate funds and other private offerings, we believe that issuers are souring to an all paper process. Instead, they are looking towards technical solutions to make the subscription process more efficient. Using technology can make the private placement subscription process a simpler experience for subscribers and advisors, similar to placing an order with your broker.

When asked for their thoughts on subscription automation, most of the attorneys acknowledged they had not considered the use of technology to facilitate private placement subscriptions, but were interested in WealthForge’s experience. In particular, we discussed the high not-in-good-order (NIGO) rates for paper subscription agreements. An industry average of 30% of subscription documents are returned with errors that need to be corrected before processing. However, based on our internal data, the NIGO rate for subscriptions processed via subscription automation technology is significantly lower, perhaps in the low single digits. This came as a surprise to the group.


Combining these two technologies, issuers can gather investor information through an easy-to-use online workflow and then automatically pre-populate all the applicable fields of a subscription document and email it for the investor to sign electronically. While this idea has yet to become widely used, the attorneys provided helpful feedback about adopting such measures.

This was the first of what we hope to turn into a series of roundtable talks with attorneys. We enjoyed the insightful conversation about topics at the cutting edge of the private markets and look forward to further discussion in the future.


The Subscription Automation Solution

How technology can bring accuracy, security, and speed to alternative investments.


Disclaimer: Altigo provides this information for educational purposes only. It should not be construed or relied upon as legal or tax advice.

About author

Chris Rohde

Chris serves as Associate Corporate Counsel at WealthForge where he advises on an array of areas, including both federal and state securities laws, broker-dealer law, general corporate law matters, and cybersecurity.
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