506x

: Issuers must take "reasonable steps" to verify an investor’s status, such as reviewing tax returns or bank statements, rather than just relying on the investor's word. Comparison at a Glance Rule 506(b) Rule 506(c) Public Advertising Prohibited Accredited Investors Non-Accredited Investors Up to 35 (must be sophisticated) None Allowed Verification Method "Reasonable Belief" "Reasonable Steps to Verify"

This is the traditional route used by many private companies to raise unlimited capital. : Issuers must take "reasonable steps" to verify

: Participation is strictly limited to accredited investors; no non-accredited investors are permitted. : Companies can sell to an unlimited number

: Companies can sell to an unlimited number of Accredited Investors and up to 35 "sophisticated" non-accredited investors. no non-accredited investors are permitted.

: The issuer must have a "reasonable belief" that the investor is accredited, often based on the investor's own questionnaire. Rule 506(c): The "General Solicitation" Exemption

: Issuers are strictly prohibited from using public advertising or "general solicitation" to market the deal.