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this post was submitted on 24 Feb 2024
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No, the idea is that there are few enough owners that the owners communicate with the operators directly. If you owned 30% of a privately held company and the other owners lied about the financials to you that would still be a crime.
Not sure why you brought up lying, that's totally different (and still illegal, public or private).
The difference between raising public vs private money is whether or not you are legally required to actively disclose your financials/risks/business plans/etc. I can (legally) raise money from a wealthy family office with nothing but a phone call (basically how most angel investments work). I can't do the same if I'm trying to raise money from a random Joe off the street, that will land me in jail.
Again, like I said, it's because it's assumed that they have a direct connection to you to ask about the company and make decisions.