How Does Regulation D Rule 506c Work For Syndication?

Discover the essentials of Regulation D Rule 506c for real estate syndications and investment funds. To get started with your syndication or fund visit https://www.moschettilaw.com

Regulation D Rule 506c offers a legal pathway for raising unlimited capital through general solicitation and advertising, provided all investors are accredited. This rule mandates that issuers take reasonable steps to verify the accredited status of their investors, typically through third-party verifications from registered broker-dealers, investment advisors, licensed attorneys, or certified public accountants. The integration of different offerings under various rules is crucial to avoid complications, especially when mixing Rule 506b and Rule 506c offerings. Resale limitations under 502d also prevent the speculative purchase and subsequent market creation of these securities.

Understanding the accredited investor definition under Rule 501a is essential, as it forms the basis for the verification process. Issuers often rely on written confirmations from professionals who are knowledgeable about the investor's financial status. There are also companies providing certification services for accredited investors, ensuring compliance with SEC guidelines. Rule 506c allows for unlimited fundraising but emphasizes the importance of accredited investor verification and adherence to resale limitations. Integration rules should be carefully considered to maintain compliance and avoid issues with different offerings. This approach enables legal capital raising without the need for SEC registration, focusing instead on making a filing under Regulation D.

Chapters:
0:00 Introduction to Regulation D Rule 506c
0:12 Importance of Understanding the Rule
0:30 The Law School Insight
0:54 Overview of Rule 506c
1:38 General and Specific Conditions
2:26 Integration of Offerings
3:39 Limitations on Resale
4:12 Accredited Investor Status
5:20 Verification Methods

Read more about Regulation D Offerings – The Legal Foundation for Raising Capital: https://www.moschettilaw.com/regulati...

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Moschetti Syndication Law Group is a boutique syndication law firm, serving small and growth-bound syndicators, and well as private equity firms. We keep our firm ‘boutique’ size so we can tailor the services to each client’s unique needs without turning the firm into a faceless factory or passing unnecessary overhead expenses onto our clients. (As our client, you’ll only pay a fixed fee, so no surprises.) As for the client experience, we give real-time answers without making you book an official appointment. And we’ll work with your ambitions and overall vision to help you close the current deal and fill-in that ‘missing’ piece - whatever you need - to keep adding more syndications to your portfolio. We keep syndicators syndicating (TM).

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