PPMs are used in private placement offerings. These offerings of stock are not registered with the Securities and Exchange Commission but fall under an exemption. A private placement is a sale of stock to a pre-determined list of individuals and entities rather than an initial public offering (“IPO”) that is available to the entire public. Private placements are an attractive alternative to IPOs because they allow businesses to raise capital for expansion quickly but without all the regulatory burdens associated with IPOs. PPMs are given to the prospective investors and describe the issuer’s business, terms of the offering, investment risks, and so forth. The objective of PPMs is to provide investors with all the disclosures needed to make informed trading decisions.