U.S. securities laws impose strict registration requirements on companies seeking to raise capital through private offerings. However, certain exemptions allow businesses to bypass this complex process. One notable exemption is Rule 506 under Regulation D, which enables companies to conduct private placements without incurring the high costs and regulatory hurdles of full SEC registration. Mangum & Associates provides nationwide expertise to help companies navigate Rule 506 offerings efficiently, offering full legal guidance to ensure compliance and support successful capital-raising initiatives in the U.S. private capital markets.
U.S. securities laws aim to protect investors and maintain market integrity, but these regulations can create hurdles for businesses raising capital. Federal registration is often time-intensive, expensive, and complicated. Rule 506 under Regulation D provides two exemptions—Rule 506(b) and Rule 506(c)—commonly referred to as “safe harbor” exemptions. Choosing the right exemption depends on your company’s investor strategy and fundraising goals. Experienced attorneys at Mangum & Associates guide companies in selecting the best option to align with their objectives.
Even with these exemptions, compliance is essential. For instance, under Rule 506(c), issuers must take reasonable steps to verify the accredited status of investors. Non-compliance can lead to serious legal consequences, including civil or criminal penalties. Our team ensures your company meets all obligations while leveraging the flexibility these exemptions provide.
Regulation D’s Rule 506(b) and 506(c) provide alternative routes for raising capital while maintaining SEC exemptions. Rule 506(b) allows unlimited fundraising from accredited investors and up to 35 non-accredited but sophisticated investors, but prohibits general solicitation and advertising, including social media or cold outreach. Rule 506(c), on the other hand, permits public advertising and general solicitation, provided all investors are accredited and the issuer verifies their accreditation. Understanding these differences helps issuers select the most suitable method for their fundraising and investor engagement strategies.
A 506(b) offering restricts general solicitation and advertising to attract investors. This limits potential investors to those with an existing relationship but maintains privacy and security in fundraising. Mangum & Associates provides guidance on structuring 506(b) offerings, ensuring compliance with regulations while helping achieve fundraising objectives efficiently and legally.
A 506(c) offering allows general solicitation and advertising to accredited investors. Unlike 506(b), issuers must verify each investor’s accreditation status rather than relying on self-certification. Mangum & Associates ensures your company navigates 506(c) offerings in compliance with SEC regulations, maximizing fundraising potential while mitigating legal risks.
Mangum & Associates provides tailored legal services to support your Rule 506 offering. We begin with a thorough assessment of your company’s financials, business operations, and disclosure obligations.
Following the assessment, we create a strategic plan outlining the appropriate Regulation D exemption, required documentation, and compliance strategies customized for your business needs.
Navigating Rule 506 offerings requires expertise to ensure compliance and successful capital raising. Mangum & Associates provides step-by-step legal support, strategic planning, and PPM document drafting. With proven experience in SEC regulations, we help companies achieve Rule 506b and 506c compliance while maximizing fundraising potential. Trust Mangum & Associates as your dedicated partner to guide your company safely and efficiently through the Rule 506 process.
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