Private Placement Attorney
for Regulation D Offerings
Regulation D private placements allow companies to raise capital from investors without registering the offering with the SEC. The exemption is widely used, but the legal requirements — offering document preparation, accredited investor verification, Form D filings, state notice requirements, and broker-dealer compliance — are more demanding than many issuers realize until a problem surfaces.
Fred Lehrer advises companies on Regulation D offerings from structure selection through closing and post-offering compliance. His enforcement background shapes how the firm evaluates offering document risk, identifies broker-dealer and finder issues, and structures offerings to reduce the exposure that generates SEC enforcement inquiries.
Rule 506(b) vs. Rule 506(c)
| Feature | Rule 506(b) | Rule 506(c) |
|---|---|---|
| Offering Amount | Unlimited | Unlimited |
| General Solicitation | Prohibited | Permitted |
| Non-Accredited Investors | Up to 35 sophisticated investors | Not permitted |
| Accredited Investor Verification | Self-certification acceptable | Reasonable steps to verify required |
| Disclosure Requirements | Full disclosure to non-accredited investors | No specific disclosure required |
| Form D Filing | Required within 15 days of first sale | Required within 15 days of first sale |
| State Preemption | Yes — Rule 506 preempts state registration | Yes — Rule 506 preempts state registration |
| Best For | Existing investor relationships, no advertising | Crowdfunding, advertising, broad investor outreach |
Private Placement Legal Services
Offering Structure Analysis
Evaluate whether Rule 506(b) or Rule 506(c) is appropriate based on the issuer's investor relationships, marketing plans, and accredited investor verification capacity. Compare Regulation D with Regulation A and other exemptions based on offering size and investor base.
Private Placement Memorandum
Draft the PPM, including business description, offering terms, use of proceeds, risk factors, management background, and financial information. A well-prepared PPM is the primary defense against investor fraud claims and SEC enforcement inquiries.
Subscription Agreements
Prepare subscription agreements, investor questionnaires, and accredited investor certification documents. For Rule 506(c) offerings, advise on verification procedures that satisfy the 'reasonable steps' standard.
Form D Filings
Prepare and file Form D with the SEC within 15 days of the first sale. Advise on state notice filing requirements and coordinate multi-state filings to maintain compliance with state securities laws.
Broker-Dealer and Finder Review
Evaluate whether persons receiving compensation for introducing investors constitute unregistered broker-dealers. Advise on finder compensation structures, FINRA registration requirements, and the legal risks of using unregistered intermediaries.
Investor Communication Review
Review investor communications, promotional materials, and social media content for compliance with Rule 506(b) general solicitation prohibitions and Rule 506(c) advertising requirements. Investor communications that constitute general solicitation in a 506(b) offering can void the exemption.
Private Placements — Frequently Asked Questions
What is a Regulation D private placement?
Regulation D is a federal securities exemption that allows companies to raise capital from investors without registering the offering with the SEC. The most commonly used rules are Rule 506(b), which permits sales to up to 35 non-accredited investors and an unlimited number of accredited investors without general solicitation, and Rule 506(c), which permits general solicitation but limits sales to verified accredited investors only.
What is the difference between Rule 506(b) and Rule 506(c)?
Rule 506(b) allows sales to up to 35 sophisticated non-accredited investors and an unlimited number of accredited investors, but prohibits general solicitation and advertising. Rule 506(c) allows general solicitation and advertising but requires the issuer to take reasonable steps to verify that all purchasers are accredited investors — verification cannot rely solely on investor self-certification.
What is a Private Placement Memorandum (PPM)?
A PPM is the primary disclosure document for a Regulation D offering. It describes the company's business, the terms of the offering, the use of proceeds, risk factors, management background, and financial information. While Regulation D does not require a PPM for accredited investor offerings, a well-prepared PPM reduces the risk of investor fraud claims, SEC comment letter exposure, and state securities law liability.
What is a Form D filing?
Form D is a notice filing that issuers must submit to the SEC within 15 days of the first sale in a Regulation D offering. Form D is not a registration statement — it does not require SEC review or approval. However, failure to file Form D on time can affect the availability of the Regulation D exemption in some states and can attract SEC attention in enforcement contexts.
When does a finder become an unregistered broker-dealer?
A finder who receives transaction-based compensation for introducing investors to an issuer may be required to register as a broker-dealer under the Exchange Act. The SEC and FINRA have consistently taken the position that receiving transaction-based compensation for securities activities is the primary indicator of broker-dealer status. Using unregistered finders in a Regulation D offering creates rescission risk, SEC enforcement exposure, and potential securities fraud liability.
What are the state securities law requirements for Regulation D offerings?
Rule 506 offerings are exempt from state registration requirements under the National Securities Markets Improvement Act, but states retain authority to require notice filings and collect fees. Most states require a Form D notice filing within a specified period after the first sale. Failure to comply with state notice filing requirements does not void the federal exemption but can result in state enforcement actions.
Request a Private Placement Consultation
Fred Lehrer advises companies on Regulation D offerings from structure selection through closing and post-offering compliance. Consultations are confidential and available by phone, video, or in person.
Request a ConsultationThe information on this page is for general informational purposes only and does not constitute legal advice. Viewing this page or contacting the firm does not create an attorney-client relationship. Legal services are available only where the attorney is admitted or otherwise authorized to practice.