For the most part, non-accredited investors are NOT allowed to invest in Regulation D offerings, including both 506(b) and 506(c).

But there is one exception for 506(b) offerings where the SEC allows up to a maximum of 35 non-accredited investors to participate. Issuers are still not allowed to advertise the investment offering to these non-accredited investors and they must be existing relationships of the issuer.

The SEC rule on this states the following for 506(b) offerings:

  • Securities may not be sold to more than 35 non-accredited investors.
  • All non-accredited investors must meet the legal standard of having sufficient knowledge and experience in financial and business matters to be capable of evaluating the merits and risks of the prospective investment.

And when these non-accredited investors are participating in the offering, the following rules will apply:

  • The issuer must give any non-accredited investors disclosure documents that generally contain the same type of information as provided in Regulation A offerings.
  • They must also give any non-accredited investors financial statement information specified in Rule 506.
  • And lastly, the issuer should be available to answer questions from prospective purchasers who are non-accredited investors.

For more on this specific provision of Rule 506(b), you can learn more by visiting the SEC’s website and reading their article on: Private placements – Rule 506(b).

About the Author: Ryan Frank

Ryan Frank
Ryan Frank is the CEO & Founder of Funded which provides end-to-end marketing/advertising solutions for equity crowdfunding and private placement capital raises. Ryan has been in the digital marketing industry for 15 years and brings a wealth of knowledge to the equity crowdfunding/capital raise space.

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Reg D + Reg S
Reg A + Reg CF + Reg D
Reg A + Reg D
Private Equity Fund / Reg D
Reg A
Reg A + Reg D
Private Equity Fund / Reg D
Private Equity Fund / Reg D
Reg D + Reg S
Private Equity Fund / Reg D
Private Equity Fund / Reg D
Reg D
Private Equity Fund / Reg D
Reg D + Reg S
Private Equity Fund / Reg D

Brands We Have Worked With

Here are some of the great brands we have worked with planning and executing capital raises:

Reg D + Reg S
Reg A + Reg CF + Reg D
Private Equity Fund / Reg D
Reg A + Reg D
Private Equity Fund / Reg D
Reg D
Reg A + Reg D
Private Equity Fund / Reg D
Private Equity Fund / Reg D
Reg D + Reg S
Ryan Frank

CEO & Founder of Funded

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Matt Belcher

CEO & Co Founder
CalTier Realty

“Ryan and the Funded team have been instrumental in both our Reg A and Reg CF raises. They understand how to find and drive qualified leads into our offerings as well as help us find ways to convert these prospects into shareholders. I wouldn’t hesitate to recommend the Funded team to any company looking to raise capital!”

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Matt Belcher

CEO & Co Founder
CalTier Realty

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CEO & Founder of Funded
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