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Tilden Moschetti: My name is
Tilden, Moschetti, securities

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attorney with the Moschetti
syndication Law Group. Today

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

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go line by line through the
actual regulation itself to

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explain everything that's going
on there.

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

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secret about when there was
anything that you were confused

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

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

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

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

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

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

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

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

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Regulations, Rule 230.506
exemption with that exemption

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for limited offers and sales
without regard to dollar amount

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

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

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

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

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some general considerations.
First, it must satisfy all the

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

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

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terms are described. Most
importantly, probably for 506c

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people is that accredited
investor definition under 501.

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

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interested in finding out what
an accredited investor is. Rule

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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people came in incorrectly
because they saw your

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

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

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

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

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

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is not interested in you putting
out offers where investors are

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going to create their own
markets. So that is certainly

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

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

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specific condition, the status
of the investors must be

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

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accredited investors. Now how
what further are they talking

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

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

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

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

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except that it must, you must
have verification Should that

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

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

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

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accredited investor, you the
issuer must take reasonable

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

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

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

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written confirmation. This and
this under see is just an

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example, a written confirmation
from somebody such as a

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registered broker dealer who has
a knowledge about whether or not

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they are a an accredited
investor, or an investment

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advisor registered with the
Securities and Exchange

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Commission. This could be
somebody who's their registered

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

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

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accredited investor, a licensed
attorney can say whether or not

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

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

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

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

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

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

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qualified for that. And so I
felt comfortable writing a

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

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accredited investor under Rule
506. A and would therefore

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

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

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

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should have that from the
investor or from their workings

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with that investor of their
financial position to be able to

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

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

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

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of that person being an
accredited investor are not. Now

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

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

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

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accredited investor. And then
they issue that certificate,

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

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

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

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

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

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that you qualify that we're
talking about accredited

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investors, that you obtain this
verification of their accredited

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

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

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

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

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

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

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506c offerings for syndicators
for funds for businesses, all

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

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

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

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

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if I can help you