Rule 506 l Regulation D l Securities Lawyer 101

CrowdfundBeat News Wire By Brenda Hamilton, , Securities Attorney
To offer and sell securities in the United States, an issuer must comply with the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), or must offer and sell the securities pursuant to an exemption from the registration statement requirements. A commonly used private offering exemption is Rule 506 of Regulation D. Rule 506 is a non-exclusive “safe harbor” for the statutory exemption provided by Section 4(2) of the Securities Act. The Rule 506 exemption is often used by issuers who engage in go public direct transactions and conduct underwritten and direct public offerings. The legal and compliance costs of Rule 506 offerings are less than those of offerings registered with the Securities and Exchange Commission (“SEC”).

With a Regulation D offering only a notice filing on Form D is required to be filed with the SEC.

Issuers conducting direct public offerings often file a registration statement with the SEC to register the resale of the securities sold in Rule 506 offerings.

Registration of the resale of the securities sold in Rule 506 offerings enables the issuer to qualify for the assignment of a ticker symbol from FINRA assuming the issuer obtained at least twenty five purchasers. Filing a resale registration statement also prevents many of the problems reverse merger issuers encounter in obtaining approval from Depository Trust Company (“DTC”) for electronic trading.

The requirements of the Rule 506 exemption are as follows:


An issuer may raise an unlimited amount of capital.


The Issuer cannot use general solicitation or advertising to market the securities offered.


An issuer may sell its securities to an unlimited number of accredited investors and up to 35 non-accredited investors that the issuer reasonably believes to be, either alone or with their purchaser representative to have sufficient knowledge and experience in financial and business matters to be capable of evaluating the merits and risks of an investment in the issuer’s securities.


Accredited Investors

An issuer is not required to furnish any specific information to accredited investors. Not that the anti-fraud provisions of the federal securities laws still apply to Rule 506 offerings.

Non-Accredited Investors

Non-Reporting Issuers. If an issuer is not required to file periodic reports under the Securities Exchange Act of 1934 then it must furnish non-accredited investors with the the same kind information as required by a Regulation A offering statement and any other information furnished to accredited investors.

Reporting Issuers. If an issuer is required to file periodic reports under the Securities Exchange Act of 1934 then it must furnish non-accredited investors with:

♦ the same kind information as required by a registration statement to be filed under the Securities Act;

♦ either: (i) its most recent annual report, definitive proxy statement, and, if requested in writing, Form 10-K; or (ii) the information contained its Form 10-K, registration statement on Form S-1 or S-11, or Form 10, depending on which was the most recently required filing;

♦ the information contained in any Exchange Act filings required since the distribution or filing of the information specified in the immediately previous section, a brief description of the securities offered, the use of the proceeds, and any material changes not otherwise disclosed in the documents furnished; and

♦ any other information furnished to accredited investors.

Offerings up to $2,000,000.

For offerings up to $2,000,000, the issuer must provide the following financial information to non-accredited investors:

♦ balance sheets as of the end of each of the two most recent fiscal years (or as of a date within 135 days if the issuer has existed for less than one year), however, only the balance sheet, dated within 120 days of the start date of the offering, must be audited;

♦ statements of income, cash flow and changes in stockholders’ equity for each of the two years preceding the date of the most recent audited balance sheet (or such shorter period as the issuer has been in business); and

♦ interim financial statements as of the end of the issuer’s most recent fiscal quarter.

Offerings up to $7,500,000.

For offerings up to $7,500,000, the issuer must provide non-accredited investors with audited financial statements. If an issuer cannot obtain audited financial statements without unreasonable effort or expense, then only the balance sheet, dated within 120 days of the start of the offering, must be audited.

Offerings over $7,5000,000.

For offerings over $7,500,000 the issuer must provide the financial statements required to be filed in a registration statement under the Securities Act.


An issuer making a Rule 506 offering must provide the opportunity for each investor, at a reasonable time prior to purchase, to ask questions and receive answers concerning the offering and to obtain any additional information which the issuer possesses or can acquire without unreasonable effort or expense that is necessary for the investor to verify the accuracy of information furnished.


An issuer must file a notice of sale on Form D with the Securities and Exchange Commission no later than 15 days after the first sale of securities in the offering and must file amendments to the Form D under certain circumstances.

For more information about Rule 506 and Form D please visit our blog post at:

For further information about Rule 506 of Regulation D and SEC registration statements and exemptions, please contact Brenda Hamilton, Securities Attorney at 101 Plaza Real S, Suite 201 S, Boca Raton Florida, (561) 416-8956, by email at or visit This memorandum is provided as a general informational service to clients and friends of Hamilton & Associates Law Group and should not be construed as, and does not constitute, legal and compliance advice on any specific matter, nor does this message create an attorney-client relationship. For more information concerning the rules and regulations affecting the use of Rule 144, Form 8K, FINRA Rule 6490, Rule 506 private placement offerings, Regulation A, Rule 504 offerings, Rule 144, SEC reporting requirements, 1933 Act registration statements on Form S-1, S-8 and 1934 Act registration statements on Form 10, OTC Pink Sheet listings, OTCBB and OTCMarkets disclosure requirements, DTC Chills, Global Locks, reverse mergers, public shells, go public direct transactions and direct public offerings or please contact Hamilton and Associates at (561) 416-8956 or by email a Please note that the prior results discussed herein do not guarantee similar outcomes.

Hamilton & Associates l Securities Lawyers
Brenda Hamilton, Securities Attorney
101 Plaza Real South, Suite 202 North
Boca Raton, Florida 33432
Telephone 561-416-8956
Facsimile 561-416-2855

Tags: , ,


This RSS feed URL is deprecated, please update. New URLs can be found in the footers at [...]

NPRAfter Outcry, Crowdfunding Site Patreon Backs Off Plan To Raise ...NPRThe popular crowdfunding service Patreon has backed off plans to change its payment structure, after widespread, vocal and passionate opposition from creators and their fans. Last week, the site announced it woul [...]

TechCrunchHow hate speech crowdfunding outfit Hatreon crept back online ...TechCrunchIf you want to make a living creating white supremacist content, you're probably not going to do it via sites like Kickstarter and Patreon, which prohibit hate speech. Fortunately there's Ha [...]

CoinDeskKickstarter ICO? Don't Count On It Says Crowdfunding Leader ...CoinDeskThe company most widely associated with crowdfunding, Brooklyn-based Kickstarter, has no plans to get into the initial coin offering (ICO) business. Coming in response to the news yesterday that compet [...]

CryptoCoinsNewsCrowdfunding Giant Indiegogo Looks to Make ICOs Mainstream ...CryptoCoinsNewsOne of the world's most popular crowdfunding platforms is getting in on the ICO game. Josiah Wilmoth on 14/12/2017. ------------------Advertisement------------------. Advertisement · Reddi [...]

ForbesCrowdfunding Do's And Dont's From iFundWomen's Karen CahnForbesDuring our conversation, she was transparent in sharing that her first software company, VProud, failed because she “did everything backwards” and spent too much time trying to perfect the product. “Pe [...]

Crowdfunding via Customers: Is This The New Startup Capital?Customer ThinkWith more and more companies in a variety of sectors developing new crowdfunding campaigns, it makes sense to ask whether crowdfunding is likely to replace startup capital in the near future. Crowdfunding is qui [...]

VentureBeatAtaribox hits the pause button on its crowdfunding campaignVentureBeatAtari was supposed to start taking preorders along with launching its crowdfunding campaign on Indiegogo today for its new Ataribox console. However, it seems to have hit an unspecified snag and in an ema [...]

Coindesk (press release) (blog)Crowdfunding Giant Indiegogo Opens to ICOs - CoinDeskCoindesk (press release) (blog)The startup revealed today that, through an existing partnership with MicroVentures, it will begin offering services to projects seek to use the blockchain funding model. [...]

TechCrunchFormer Gawker employees are crowdfunding an effort to buy Gawker.comTechCrunchWhile Univision acquired most of Gawker Media's sites last year (and renamed them as the Gizmodo Media Group), the deal didn't include Gawker itself. In fact, BuzzFeed reported last month [...]

CFB Finance


  • Crowdfunding
  • Crowdfund
  • Peer to Peer Lending
  • FinTech
  • Reg A+
  • Reg CF
  • Crowdfunding USA

Press Release

Live Crowdfunding .tv

What's Next Step in Regulation A+ JOBS ACTS Title IIII :L Interview : Steve Cinelli with Brian Korn Securities and Crowdfunding/Peer-to-Peer Lending Lawyer, Watch more video library | Conference | Interview | Campaign Showcase | Research | Education |