Reg D Rules

CEO RESOURCE LLC • STARTUP FUNDRAISING • REGULATION D

REGULATION D & ACCREDITED INVESTORS

Understand These Rules Before You Start Raising Investor Capital.

Regulation D can make an exempt securities offering possible. It does not make fundraising simple, risk-free or exempt from the rest of the securities laws.

UPDATED SEPTEMBER 19, 2026

DEAR FRIEND AND FELLOW ENTREPRENEUR,

Need to raise investor capital for your startup company?

Be prepared to walk down a dragon-infested path on your way to your post-funding Point B.

Federal securities law begins with a fundamental principle: an offer or sale of securities generally must either be registered or qualify for an exemption from registration.

Regulation D contains several of the exemptions most frequently encountered by startup and privately held companies—but complying with Regulation D is only part of complying with securities law.

I LEARNED THIS BY RAISING THE CAPITAL MYSELF

This subject is not academic to me.

I personally completed 44 Regulation D 506 capital raises for 44 of my own companies and limited partnerships, raising $120.1 million in today’s dollars from 1,342 investors.

I also founded, served as CEO and chaired Goodman Securities, Inc., a direct-participation broker-dealer that was a member of NASD and SIPC.

When you are personally responsible for raising the money, signing the documents and living with the consequences, securities compliance gets your attention very quickly.

This distinction is essential.

A properly structured Regulation D offering may exempt an issuer from registering the offering under Section 5 of the Securities Act.

It does not eliminate federal anti-fraud provisions.

It does not eliminate every state-law requirement.

It does not automatically authorize public solicitation.

It does not automatically legalize paying unregistered finders or success fees.

And it does not mean you can omit material information or make misleading statements to investors.

THE THREE CURRENT REGULATION D OFFERING EXEMPTIONS

Rule 504 — certain eligible issuers may offer and sell up to $10 million of securities during the applicable 12-month period, subject to the rule’s conditions and substantial state-law considerations.

Rule 506(b) — permits an unlimited dollar amount but prohibits general solicitation and advertising. An unlimited number of accredited investors may purchase, together with no more than 35 qualifying non-accredited purchasers during the applicable 90-calendar-day period.

Rule 506(c) — permits an unlimited dollar amount and permits general solicitation, but every purchaser must be an accredited investor and the issuer must take reasonable steps to verify accredited-investor status.

RULE 505 IS GONE

If you are reading an article, book, website or old offering manual that discusses Rule 505 as a current Regulation D exemption, you are looking at obsolete information.

Current Rule 504 permits qualifying issuers to offer and sell up to $10 million during the applicable 12-month period.

The rule is unavailable to certain issuers, including Exchange Act reporting companies, investment companies and certain blank-check or development-stage companies described by the rule.

Rule 504 is also subject to bad-actor disqualification provisions.

State securities registration, exemption, disclosure, solicitation and filing requirements can be especially important in a Rule 504 offering. Have securities counsel analyze every state in which securities will be offered or sold.

RULE 506(b) — PRIVATE MEANS PRIVATE

Rule 506(b) permits an issuer to raise an unlimited amount of capital.

The issuer may sell to an unlimited number of accredited investors and, subject to the rule, no more than 35 non-accredited purchasers in any 90-calendar-day period.

Every participating non-accredited purchaser must possess, alone or together with a purchaser representative, sufficient knowledge and experience in financial and business matters to evaluate the merits and risks of the investment—or the issuer must reasonably believe that standard is satisfied immediately before the sale.

If non-accredited investors participate, Rule 502(b) imposes specific disclosure requirements that do not apply in the same way to an accredited-investor-only Rule 506(b) offering.

Rule 506(c) changed the private-capital landscape by permitting broad solicitation and general advertising when its conditions are satisfied.

The issuer must also take reasonable steps to verify accredited-investor status.

Merely asking an investor to check a box saying “I am accredited” should not be confused with satisfying the separate Rule 506(c) verification requirement.

The rule provides non-exclusive verification methods, and the SEC also recognizes a principles-based, facts-and-circumstances approach.

A GOOD EXAMPLE OF WHY YOU NEED CURRENT INFORMATION

SEC staff guidance concerning Rule 506(c) verification continued evolving in 2025 and 2026.

In 2025, SEC staff confirmed that a sufficiently high minimum cash investment can be a relevant factor in the reasonable-verification analysis when accompanied by appropriate representations and other conditions.

In July 2026, the Division issued additional interpretation concerning digital attestations in a tokenized-security context and emphasized retention of adequate verification records.

WHAT IS AN ACCREDITED INVESTOR?

This definition is much broader today than the definition that appeared on this website in 2003.

Rule 501(a) contains the controlling definition. The following is a practical summary—not a substitute for reading the current rule and having counsel apply it to a particular investor.

DO NOT USE THE OLD “$1 MILLION INCLUDING THE HOUSE” TEST

The net-worth test changed after the version formerly reproduced on this website.

For the ordinary Rule 501(a)(5) calculation, a natural person’s primary residence generally is not counted as an asset, and the rule contains specific requirements for handling indebtedness secured by the residence.

Rule 501(a) includes numerous entity categories. Depending on the facts, these can include:

The precise language and conditions in Rule 501 control.

DOES REGULATION D REQUIRE A PRIVATE PLACEMENT MEMORANDUM?

Not every Regulation D offering is subject to a universal federal requirement that a document bearing the title “Private Placement Memorandum” or “PPM” be prepared.

That does not mean disclosure is optional or unimportant.

Rule 506(b) imposes specified information requirements when non-accredited purchasers participate.

Even where Regulation D does not prescribe a particular disclosure document for accredited investors, federal and state anti-fraud laws remain applicable.

A competent securities attorney should determine what offering memorandum, subscription materials, risk disclosures, financial information and other documentation your particular transaction requires.

Regulation D transactions remain subject to the federal securities laws’ anti-fraud provisions.

The issue is not merely whether every statement you make is technically true.

Material omissions can be dangerous too. Information should not be presented in a way that makes what you tell investors misleading in light of what you fail to tell them.

FORM D IS NOW AN ELECTRONIC EDGAR FILING

The old paper-era instructions reproduced on this page are obsolete.

An issuer relying on Rule 504, Rule 506(b) or Rule 506(c) generally files Form D electronically through the SEC’s EDGAR system.

The initial Form D is generally due no later than 15 days after the first sale.

Amendment requirements also apply, including annual amendments for offerings that remain ongoing when required by Rule 503.

Federal Regulation D is not the entire compliance analysis.

Rule 506 securities generally receive federal preemption from state registration and qualification requirements, but states may still require notice filings, consent to service of process and fees and retain anti-fraud enforcement authority.

Rule 504 offerings can involve substantially more state-law analysis.

Your securities attorney should identify every state connected with the offering and determine the requirements applicable there.

BAD-ACTOR DISQUALIFICATION CAN DESTROY YOUR PLANNED EXEMPTION

Rule 506 contains disqualification provisions involving specified criminal convictions, court orders, regulatory orders and other disqualifying events involving the issuer and other covered persons.

Rule 504 is also subject to bad-actor disqualification provisions.

This is one reason securities counsel should conduct appropriate diligence on officers, directors, significant owners, placement agents, solicitors and other potentially covered persons before the offering begins—and continue considering the issue while the offering remains open.

The 2003 version of Regulation D on this website contained the old Rule 502(a) six-month integration framework.

The current rule instead directs issuers to Rule 152, which contains the current integration principles and safe harbors.

This matters particularly when companies conduct multiple offerings, move between exemptions or conduct exempt and registered offerings within relatively short periods.

Purchasers in Rule 506 offerings generally receive restricted securities.

An investor should not assume that securities purchased in a private offering can immediately be resold into a public market. Registration or an available resale exemption may be required.

REGULATION D DOES NOT GIVE YOU A FREE PASS TO PAY SUCCESS FEES

Whether the securities offering itself is exempt from registration is a different question from whether somebody assisting with the sale of those securities is engaging in activity requiring broker-dealer registration.

Transaction-based compensation is a major warning sign.

Before paying anybody a percentage of the money raised, read my Success Fees page and have your securities attorney approve the exact arrangement.

WHY I NO LONGER REPRINT A FROZEN COPY OF THE ENTIRE REGULATION HERE

For many years this page reproduced the Regulation D text then available from the SEC.

That was useful at the time—but securities law changed while the copied text did not.

Today, the better service to startup founders is to take you directly to the continuously updated Electronic Code of Federal Regulations and current SEC guidance.

CURRENT OFFICIAL REGULATION D RULES — 17 CFR §§ 230.500–230.508

Use these links when you want to read the actual current regulatory language.

CURRENT SEC GUIDANCE WORTH BOOKMARKING

THIS IS NOT A DO-IT-YOURSELF LEGAL PROJECT

You should understand Regulation D well enough to ask intelligent questions and recognize obvious danger.

You should not conclude from understanding these concepts that you should structure and launch your securities offering without competent securities counsel.

The cost of getting securities counsel involved before the offering is usually trivial compared with the cost of discovering after the money has been raised that the offering was improperly structured.

WHAT CEO RESOURCE LLC CAN HELP YOU WITH

I am not your securities attorney and CEO RESOURCE LLC does not provide legal opinions.

What I can bring to the table is the business-side experience of somebody who personally raised outside capital 44 times and lived through both the successes and the enormous number of prospective investors who said no.

That can include pressure-testing your business plan, financial assumptions, investor story, use of proceeds, capitalization needs, presentation materials, management readiness, implementation plan and the multitude of other dragons that determine whether you are genuinely ready for fundraising prime time.

THE BOTTOM LINE

Do not raise your first dollar and then start asking whether your offering complies with securities law.

Determine the exemption first.

Determine who may be solicited.

Determine who may purchase.

Determine what disclosure is required.

Determine what federal and state filings are required.

Determine whether anybody being compensated in connection with the raise creates a broker-dealer problem.

Then raise the money.

Important: This page provides general business and educational information based in part upon Robert Lee Goodman’s historical fundraising and broker-dealer experience. It is not legal, securities, investment, tax or accounting advice. Securities laws and SEC interpretations change and are highly fact-specific. The linked eCFR and SEC materials should be checked for their current status, and your own qualified securities counsel should determine the requirements applicable to your specific offering.

Best wishes for stellar success,

CEO & Chief ImpleMentor™

CEO RESOURCE LLC