This Week on the Private Money Minute, Jillian Sidoti explains the difference between Rule 506(b) and Rule 506(c) of Regulation D.
“This week on The Private Money Minute, we’re gonna discuss the difference between Rule 506(b) and Rule 506(c), and we’re gonna do that right now. Under Rule 506(b) of Regulation D of the Securities Act of 1933, we are allowed to raise as much money as we want, from a group of accredited investors, as many as we want, and up to 35 sophisticated investors. The only reason why we’re allowed to do this is because you’re not supposed to use any general solicitation to get those investors through the door. General solicitation meaning, advertising for investors. However, under Rule 506(c) under Regulation D of the Securities Act of 1933, we can raise as much money as we want from accredited investors and use general solicitation. But you have to verify that your investors are actually accredited, and for those of you that don’t know, an accredited investor is somebody who makes $200,000 a year as an individual, $300,000 a year as a married couple or has a net worth of a million dollars exclusive of their primary residence. I’m Jillian Sidoti, and this has been The Private Money Minute”.
If you want to learn about Regulation D, click here.