General solicitation — Rule 506(c)

Rule 506(c) permits issuers to broadly solicit and generally advertise an offering, provided that:

• all purchasers in the offering are accredited investors
• the issuer takes reasonable steps to verify purchasers’ accredited investor status and
• certain other conditions in Regulation D are satisfied

Purchasers in a Rule 506(c) offering receive “restricted securities.” A company is required to file a notice with the Commission on Form D within 15 days after the first sale of securities in the offering. Although the Securities Act provides a federal preemption from state registration and qualification under Rule 506(c), the states still have authority to require notice filings and collect state fees.

Rule 506(c) offerings are subject to “bad actor” disqualification provisions.

Relevant FAQs

• Do the anti-fraud provisions apply?
• What is an accredited investor?
• Do state law requirements apply?
• What are restricted securities?
• What is the process for requesting a waiver of “bad actor” disqualification?