Introduction to new Rule 506C which allows you to advertise a private securities offering to accredited investors.

1. www.securities-law.info
SEC Reg D
Rule 506 C

2. Disclaimer




This is not legal or
investment advice of any
kind
Seek competent advice
from qualified attorneys
and investment bankers
Your situation may vary
The more you know about
finance and business, the
more you can profit

3. This covers the new Reg D, Rule 506 C,
not old Rule 506
Now advertising is allowed for 506 C
offerings
Under the pre-existing rules, advertising is
not allowed under old 506,
now known as 506 B

4. SEC Reg D, Rule 506c
Changes to SEC
Rule 506 permit
you to use general
solicitation and
general advertising
to offer your
securities, IF . . .

5. Verified Accredited Investors Only
You take
reasonable,
documented steps
to verify that the
investors are
accredited
investors and

6. Accredited at Time of Sale
All buyers are
accredited investors
under Regulation D,
Rule 501 or you
reasonably believe that
the investors fall within
one of the categories at
the time of the sale of
the securities

7. Definition of Accredited
Under Rule 501, a
person
is
an
accredited investor
if he or she has
either:

8. Net Worth Accredited Test
An individual net worth
or joint net worth with
a spouse that exceeds
$1 million at the time
of
the
purchase,
excluding the value
(and
any
related
indebtedness) of a
primary residence

9. Accredited Investor Income Test
Individual
annual
income over $200,000
in the two most recent
years or a joint annual
income with a spouse
over $300,000 for those
years, and a reasonable
expectation of the same
in the current year

10. Verifying Investors are Accredited
The determination of
the reasonableness of
the steps taken to
verify an accredited
investor
is
an
objective assessment
by an issuer

11. Facts and Circumstances
You must consider
the
facts
and
circumstances of
each purchaser and
the transaction

12. You Can Use Other Methods
The rule provides a
non-exclusive list of
methods that issuers
may use to verify
the requirement for
individuals,
including:

13. Written Verification of Accredited
Investor
Written confirmation
from a broker, SEC
registered investment
adviser,
licensed
attorney, or CPA that
they have taken
reasonable steps to
verify the purchaser's
accredited status

14. Old 506 is now 506 B
The existing
provisions of the old
Rule 506 as a
separate exemption
are not affected by
the final 506 C rule

15. Old 506 Now 506 B
You can still do 506
offerings without the
use
of
general
solicitation
or
advertising and you are
not subject to the new
verification rule. This is
now called 506 B

16. Filing Form D for 506 C
You must file a Form
D with the SEC
giving
basic
information on the
offering

17. 506 C – Only Accredited Investors
Only accredited
investors are
allowed in a 506 C

18. No Limits on Funding
In a 506 C you can
raise an unlimited
amount of money

19. Verifying Accredited Investors
While
506
C
provides a list of
some ways to verify
your investors are
accredited, you may
use other ways if
reasonable and you
document them

20. Bad Boy Provisions
Persons with a
history of certain
violations may be
disqualified or
these may have to
be disclosed

21. Bad Boys
The
company
should verify that
none
of
the
insiders fall into
these “bad boy”
provisions

22. State Regulations
State regulations,
other then antifraud, are preempted but you
may need to file a
Form D in some
states

23. Get Your Offering Funded
Questions –
email me at
John.Lux@
SecuritiesLaw.info

(240) 200-4529


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