Regulation D is the SEC’s framework of exemptions allowing companies and funds to sell securities without public registration. Its Rule 506 is the legal foundation of most private placements in the United States, including the private funds, real estate syndications, and DSTs sold through advisor channels.
Where Reg D fits
The Securities Act of 1933 requires every securities offering to be registered unless an exemption applies. Section 4(a)(2) exempts transactions “not involving any public offering,” but its boundaries are judge-made and uncertain; Regulation D exists as the safe harbor that turns that uncertainty into checkable conditions. An offering that satisfies Rule 506 is deemed a valid private placement, and — a feature issuers prize — Rule 506 securities are “covered securities,” preempting substantive state blue sky registration (states retain notice filings and fees). Issuers report each offering by filing Form D within 15 days of the first sale, which is why Form D filings are the public breadcrumb trail of the private market.
506(b) versus 506(c): the distinction that matters
Rule 506 comes in two flavors, split by one variable — publicity — with consequences flowing from it.
Rule 506(b) is the traditional quiet placement: no general solicitation or advertising. Issuers may raise unlimited amounts from unlimited accredited investors plus up to 35 non-accredited-but-sophisticated investors — though including non-accredited investors triggers prospectus-level disclosure obligations, so most 506(b) deals are accredited-only in practice. Because there’s no advertising, investors typically arrive through pre-existing relationships, and accreditation may rest on self-certification in the subscription agreement.
Rule 506(c), created by the JOBS Act, permits general solicitation — public websites, webinars, advertising — in exchange for two tightenings: every purchaser must be accredited, and the issuer must take reasonable steps to verify accreditation, not merely accept a checkbox. Verification in practice means reviewing income or asset documentation or obtaining a professional’s confirmation letter, and it’s why publicly marketed offerings ask for paperwork that relationship-based deals don’t.
For advisors, the split explains everyday texture in the alts market: why some sponsors can email blast an offering while others can’t mention deals until a relationship exists, why subscription friction varies, and why “I saw this deal advertised” tells you which rule — and which investor-eligibility regime — governs. Bad-actor disqualification rules apply across both, barring offerings involving covered persons with disciplinary histories. Restricted-security status also applies across both: Reg D securities generally can’t be resold freely, which layers legal illiquidity on top of the practical kind.
FAQ
What is Regulation D in simple terms?
The SEC rulebook that lets issuers raise money privately without registering the offering — the legal machinery behind most private funds and syndications.
What's the difference between 506(b) and 506(c)?
Advertising. 506(b) prohibits general solicitation but allows self-certified accredited investors (plus up to 35 sophisticated non-accredited); 506(c) allows public marketing but requires all investors to be accredited and their status verified with documentation.
Is there a limit on how much can be raised under Rule 506?
No — both 506(b) and 506(c) permit unlimited offering sizes. (Reg D’s rarely used Rule 504 caps offerings at $10 million.)
What is Form D?
The notice filing an issuer submits to the SEC within 15 days of the first sale in a Reg D offering, disclosing basic facts about the issuer, exemption claimed, and amounts raised.
Related terms
Private Placement · Accredited Investor · Form D · Securities Act of 1933 · Blue Sky Laws · Offering Memorandum / PPM
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