Regulation D Private Placements

Most questions in the highest-weighted unit on the exam are really asking which exemption the issuer chose.

Which One-Liners Win Points?

• Registration only. Regulation D never exempts antifraud or civil liability, only the issuer can claim it, state law still applies, and failing one exemption does not bar the general private-offering exemption.
• Small-offering exemption. Capped, net of the prior 12 months, and closed to Exchange Act reporting companies, investment companies, and blank-check development-stage companies. Aggregate offering price counts non-cash consideration, and general solicitation runs only through three narrow state-law paths.
• The two uncapped safe harbors are mirror images. The no-solicitation private placement has no ceiling and bans general solicitation outright. The accredited-only exemption permits it, but every purchaser must be accredited and verified, and neither information delivery nor the solicitation ban reaches that offering.
• Counting purchasers. Accredited investors never count, so sales to them are unlimited. Neither do a relative, spouse, or spouse's relative sharing the purchaser's residence, nor an entity they majority-own.
• An entity is one purchaser, unless it was formed to buy the offering and is not itself accredited, when each beneficial owner counts separately.
• A non-accredited purchaser needs the knowledge and experience to evaluate the deal, alone or with a purchaser representative who is independent of the issuer, acknowledged in writing for that specific investment, and disclosing material relationships.
• Written information is owed only to a non-accredited purchaser under the no-solicitation exemption, while the ask-questions-and-get-answers right runs to every purchaser in that offering.
• Regulation D securities are restricted securities, except those sold through the small-offering exemption's state-law paths.
• Form D is a notice to the Securities and Exchange Commission (SEC), amended for a material mistake, any change in the information filed, and annually while the offering continues.
• Disqualification stacks two ways: a court injunction over the Form D filing requirement, and the bad-actor provision, reaching directors, executive officers, general partners, 20% owners, promoters, paid solicitors, and a fund's investment manager.
• Insignificant deviations save the exemption purchaser by purchaser, where the failed condition was not meant to protect that purchaser, the miss was insignificant, and the issuer acted in good faith.

Which Numbers Matter Most?

Which Gotchas Trip Students Up?

Exam Tip: Gotchas

• The 90-calendar-day window is part of the purchaser limit. An answer reading "no more than 35 purchasers, ever" misstates the rule.
• "Should consider" is not "must." The issuer furnishing information to a non-accredited purchaser is asked to weigh giving accredited investors the same, not required to.
• A late Form D does not by itself disqualify an issuer. The injunction-based disqualification needs an actual court order tied to the filing requirement.
• "Participating in the offering" limits other officers only. A director or executive officer is covered whether or not they touched the deal.
• The cure never reaches the solicitation ban, the dollar cap, or the purchaser limit. Those three failures are always significant.
• Bad-actor lookbacks are not uniform. A felony reaches back 10 years generally and 5 for the issuer itself, and an event before the claimed exemption's cutoff needs written disclosure rather than disqualification.

One-Breath Recap

Regulation D exempts an issuer's own offers and sales from registration, never from antifraud liability. The small-offering exemption is capped, the no-solicitation private placement is uncapped but bans general solicitation, and the accredited-only exemption permits advertising if every purchaser is accredited and verified. Sales to accredited investors are unlimited, while other purchasers cap at 35 in any 90 calendar days. Written information is owed only to a non-accredited purchaser under that exemption, the securities are restricted, and Form D is due 15 calendar days after the first sale.

Need more than the recap? Read the full Regulation D Private Placements unit.