Regulation D provides the Rule 504, Rule 506(b), and Rule 506(c) exemptions for qualifying unregistered U.S. securities offerings.
SEC Regulation D, commonly called Reg D, is a set of federal exemptions and safe harbors that allows qualifying securities offerings to proceed without full Securities Act registration. Its current capital-raising routes are Rule 504, Rule 506(b), and Rule 506(c).
Regulation D reduces registration burdens, but it does not eliminate offering conditions, anti-fraud liability, state notices, or resale restrictions. The issuer must support the specific rule it relies on.
$10 million in a 12-month period.| Feature | Rule 504 | Rule 506(b) | Rule 506(c) |
|---|---|---|---|
| Offering limit | $10 million in 12 months | No federal dollar cap | No federal dollar cap |
| General solicitation | Generally restricted, with specified exceptions | Prohibited | Permitted |
| Accredited investors | No general federal requirement that every purchaser be accredited | Unlimited accredited investors | All purchasers must be accredited |
| Non-accredited investors | Permitted subject to the rule and state law | Up to 35 in a 90-day period; sophistication and disclosure conditions apply | Not permitted as purchasers |
| Accredited-status standard | Depends on offering structure | Issuer must reasonably believe the purchaser is accredited | Issuer must take reasonable steps to verify accredited status |
| State registration review | Potentially applies | Federally preempted | Federally preempted |
This table omits eligibility, integration, disqualification, disclosure, state-law, and transaction-specific details. It is a comparison tool, not a compliance conclusion.
Rule 506(b) is a safe harbor under Securities Act Section 4(a)(2). It permits an unlimited offering amount and sales to an unlimited number of accredited investors, but the issuer cannot use general solicitation or advertising.
The rule permits up to 35 non-accredited purchasers in a 90-day period if they satisfy the required financial and business sophistication standard, alone or with a purchaser representative. When non-accredited investors participate, specified disclosure and financial information requirements apply.
Even one purchaser who does not satisfy the applicable conditions can put the offering’s compliance at risk.
Rule 506(c) permits broad solicitation and advertising if:
Checking a self-certification box is not automatically sufficient under Rule 506(c). The SEC uses a facts-and-circumstances approach and provides non-exclusive verification methods for natural persons.
Rule 504 permits eligible issuers to offer and sell up to $10 million of securities during a 12-month period. It does not impose a general federal requirement that every purchaser be accredited.
Rule 504 can remain subject to state registration or qualification. General solicitation and whether securities are restricted depend on the conditions used, including applicable state registration and disclosure requirements. Issuer eligibility and bad-actor disqualification also matter.
Assume a private company wants to raise $8 million from investors.
Scenario A: The company has a limited network of investors and does not want to advertise publicly. Rule 506(b) may fit the solicitation approach. If it admits non-accredited investors, it must evaluate the 35-purchaser limit, sophistication standard, and required disclosures.
Scenario B: The company wants to advertise the offering on a public website. Rule 506(b) would not fit that solicitation method. Rule 506(c) can permit the advertising, but every purchaser must be accredited and the company must take reasonable verification steps.
The $8 million amount does not decide between 506(b) and 506(c), because neither rule has a federal dollar cap. Solicitation method, purchaser status, verification, disclosure, and the documented compliance process drive the choice.
An issuer relying on Rule 504 or Rule 506 must generally file Form D electronically through EDGAR within 15 days after the first sale. The first sale is tied to the investor becoming irrevocably contractually committed, not merely to the first marketing communication.
Form D is a notice, not SEC approval and not the source of the exemption. SEC staff guidance states that filing Form D is required but is not itself a condition to the availability of Rule 504 or Rule 506. A missed filing can still create compliance and enforcement consequences.
States may require their own notices, copies, fees, and deadlines. Federal preemption under Rule 506 does not eliminate those requirements or state anti-fraud authority.
Private offerings can involve limited disclosure, illiquidity, valuation uncertainty, loss of the entire investment, and long holding periods.
$10 million limit and issuer obligations.This article is educational only and does not provide legal, tax, compliance, or investment advice. Regulation D analysis depends on current rules and the facts of the offering.