: Issuers must take "reasonable steps" to verify an investor’s status, such as reviewing tax returns or bank statements, rather than just relying on the investor's word. Comparison at a Glance Rule 506(b) Rule 506(c) Public Advertising Prohibited Accredited Investors Non-Accredited Investors Up to 35 (must be sophisticated) None Allowed Verification Method "Reasonable Belief" "Reasonable Steps to Verify"
This is the traditional route used by many private companies to raise unlimited capital.
For deeper reading, you can find a comprehensive comparison guide at Carta or view a detailed comparison chart from Dunn Carney LLP . : Issuers must take "reasonable steps" to verify
: Unlike 506(b), companies can use their website, social media, or other public advertisements to attract investors.
The most helpful articles on this topic often compare its two primary "safe harbors": and Rule 506(c) . Rule 506(b): The Private Placement Standard : Unlike 506(b), companies can use their website,
: Participation is strictly limited to accredited investors; no non-accredited investors are permitted.
506(b) vs. 506(c) Offerings: A Guide for Private Funds - Carta 506(b) vs
Introduced by the JOBS Act, this rule allows for much broader marketing of a deal.