Quick Answer
Regulation D is a group of Securities and Exchange Commission (SEC) rules that exempt an issuer's own offers and sales of securities from Securities Act registration, not from antifraud or other liability. It works alongside state securities law, not in place of it, and failing one Regulation D exemption never forecloses another available exemption.
Regulation D groups together several distinct exemptions, not one single path. Each one trades a different mix of dollar limits, purchaser restrictions, and solicitation rules for the shortcut around registration, and only the offering's own issuer, never an affiliate or a reseller, can claim any of them.
What Does Regulation D Actually Exempt?
- Regulation D exempts certain offers and sales of securities from the Securities Act's registration requirement.
- It is a registration exemption only. It does not exempt an offering from antifraud, civil liability, or other provisions of the federal securities laws.
- The exemption belongs to the issuer of the securities. An affiliate of the issuer, or any other person reselling the issuer's securities, cannot claim it.
Exam Tip: Gotchas
- Regulation D exempts an offering from registration, not from antifraud liability. An issuer and its placement agents must still avoid material misstatements and omissions in offering materials.
Does Regulation D Replace State Securities Law?
No. Regulation D does not remove an issuer's need to comply with applicable state securities law. It is meant to be one part of a uniform federal-state system of limited-offering exemptions, working alongside state requirements rather than overriding them.
Can an Issuer Still Rely on Another Exemption After Missing Regulation D's Conditions?
Attempting to comply with a Regulation D exemption is not an exclusive election. An issuer that fails to satisfy every condition of the no-solicitation private placement exemption may still claim another available exemption, such as the Securities Act's general private-offering exemption itself.
Exam Tip: Gotchas
- Missing a condition of one Regulation D exemption does not automatically disqualify the offering from every exemption. The issuer may still qualify under the Securities Act's general private-offering exemption on its own facts.
What Happens If an Offering Is Actually a Scheme to Evade Registration?
Regulation D is unavailable for any transaction, or chain of transactions, that is technically compliant with its terms but is actually part of a plan or scheme to evade the Securities Act's registration requirements. Technical compliance on paper does not protect an offering built to dodge registration in substance.
What Should You Check on Exam Day?
- Regulation D exempts registration only, not antifraud or other liability duties.
- The exemption belongs to the issuer alone, never to an affiliate or to someone reselling the issuer's securities.
- State securities law still applies alongside Regulation D.
- Failing one exemption's conditions does not bar claiming the Securities Act's general private-offering exemption instead.
- A technically compliant offering that is really a scheme to dodge registration still loses Regulation D.