Tilden Moschetti: My name is
Tilden, Moschetti, securities

attorney with the Moschetti
syndication Law Group. Today

we're going to do a deep dive
into Regulation D Rule 506c and

go line by line through the
actual regulation itself to

explain everything that's going
on there.

When I was in law school, one of
my professors told me a little

secret about when there was
anything that you were confused

about what was going on, was go
to the rule itself and

understand that, and that will
explain everything, which is why

today I wanted to go through
Rule 506c and another video, I

already went through rule 506b,
but it's useful to go through

506c in case that's one of the
options that you are considering

for your own syndication or fun.
So let's go ahead and open up

the case of the law itself. So
this is the text of Regulation D

rule 506c you can see it's in
book 17 of the Code of Federal

Regulations, Rule 230.506
exemption with that exemption

for limited offers and sales
without regard to dollar amount

or offering. So I've cut out a
and b here. And so really,

here's the law as of 506c. So
first, we talk a little bit

about the conditions that must
be met in order for it to be a

to fall under here. And there
are some specific or there are

some general considerations.
First, it must satisfy all the

terms and conditions of two 30.5
of one and two, A and D. So

those are here to 3501 is the
where all the definitions and

terms are described. Most
importantly, probably for 506c

people is that accredited
investor definition under 501.

A, we also have a video about
that. And if you're more

interested in finding out what
an accredited investor is. Rule

502 is the general other general
conditions that must be met. Now

it says and 506c, that is A and
D. So here we're talking about

integration under a what that
means is if let's say a fund,

put together multiple offers,
right? So it put together an

offer this offer and then this
offer and this offer, maybe

they'd have one under 506 B and
then one under 506c, it says

that well, this is how we need
to first determine whether those

offers should be integrated. By
integrated, of course we mean,

should they be considered one
and the same. That's always a

consideration of ours. And it's
also important, especially if

you're thinking, Well, I'm going
to do a 506c, but I'd like to do

a 506 B. Because if it becomes
integrated, suddenly you've got

a problem. You've got those
people who came in on a 506 B,

because you did it later. Maybe
if it's integrated, then those

people came in incorrectly
because they saw your

advertising. So integration is a
big deal. 502d is limitations on

resale. I also did a video on
the limitations of resale.

Basically, you should not be
buying this security in order to

with the intent of selling it.
It is not a speculative

purchase, where you're looking
to sell it into a market the SEC

is not interested in you putting
out offers where investors are

going to create their own
markets. So that is certainly

true. So that is 506c one. There
are specific conditions as well

that need to be addressed. But
really, we're talking about one

specific condition, the status
of the investors must be

accredited investors, we know
that. So all investors must be

accredited investors. Now how
what further are they talking

about? It's this. It's this
verification of the accredited

investor status. So that's what
the SEC ultimately wants to do.

It's saying that yes, you can
advertise or make a general

solicitation of your offer it to
the public out to the world,

except that it must, you must
have verification Should that

this accredited investor is a,
in fact an accredited investor.

It is almost certain that the
best way to do this is to rely

on third parties to verify we in
order to verify that they're an

accredited investor, you the
issuer must take reasonable

steps to verify that they are.
Right the best way and the

simplest way to prove that
you've taken reasonable steps is

to rely on third parties. So
that means in this case, a

written confirmation. This and
this under see is just an

example, a written confirmation
from somebody such as a

registered broker dealer who has
a knowledge about whether or not

they are a an accredited
investor, or an investment

advisor registered with the
Securities and Exchange

Commission. This could be
somebody who's their registered

investment advisor, there are
IA, who has knowledge of what

their account status is, and
whether or not they are a

accredited investor, a licensed
attorney can say whether or not

they are now the attorney needs
to know that person and needs

that be knowledgeable about the
fact that they are, for example,

I have written a letter to like
this for not for clients and not

for investors, but for investors
that I knew. And I looked over

their accounts, and I verified
that they were in fact,

accredited investors under the
rule of 501. A, that they

qualified for that. And so I
felt comfortable writing a

letter that confirm that, in my
opinion, this person is an

accredited investor under Rule
506. A and would therefore

invest in a an an offering that
was under Rule 506c. Lastly, is

a certified public accountant
who's duly registered as well,

they may have those same, that
same kind of knowledge, they

should have that from the
investor or from their workings

with that investor of their
financial position to be able to

determine that they are in fact
a credited investor. Those are

just some of the ideas on what
that the SEC gives in terms of

what it is, there are companies
that also give up certification

of that person being an
accredited investor are not. Now

in order to be compliant with
that almost all of them will

have an attorney on staff or a
accountant on staff, who also

supervises the work to verify in
their opinion that they are an

accredited investor. And then
they issue that certificate,

which can be sent to you as the
sponsor of the security. This is

the deep dive into Rule 506c you
can see there's actually not a

lot going into it a under Rule
506c, you can raise an unlimited

amount of money, you can raise
over you can raise up to a year

or longer if you extend it. But
what you have to do is make sure

that you qualify that we're
talking about accredited

investors, that you obtain this
verification of their accredited

investor status, and that they
know also that they that there

are these limitations on resale,
and that there is a possibility

that offers could be integrated
with each other. And so you need

to consider what that what
effect would have on yours. My

name is Tilden Moschetti. I am a
securities attorney with the

Moschetti syndication Law Group.
I put together a lot of Reg D

506c offerings for syndicators
for funds for businesses, all

sorts of things in order for
them to be able to raise capital

legally without registering with
the SEC. They only are making a

filing under Regulation D if I
can help you please feel free to

get in contact with me and we
can have a conversation and see

if I can help you