Latest / Inside Securities Law with Frederick M. Lehrer
Rule 506(b) and 506(c): The Line You Cannot Uncross
Rule 506 of Regulation D is the most used exemption in American capital formation and the most frequently broken. Most of the breakage happens at one line: general solicitation.
There are two flavors. 506(b) and 506(c).
Under 506(b) you may sell to an unlimited number of accredited investors and up to thirty-five non-accredited investors, provided those non-accredited investors are financially sophisticated and receive specified disclosure. There is no dollar limit. You may generally rely on an investor's written representation that they are accredited, absent facts suggesting otherwise. What…
The skinny
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