Regulation D (SEC) - Overview

Overview

Reg D is composed of various rules dictating the qualifications needed to meet the SEC exemptions. Rule 501 of Reg D contains definitions that apply to the rest of Reg D. Rule 502 contains the general conditions that must be met to take advantage of the exemptions under Regulation D. Generally speaking, these conditions are (1) that all sales within a certain time period that are part of the same Reg D offering must be "integrated", meaning they must be treated as one offering, (2) information and disclosures must be provided, (3) there must be no "general solicitation", and (4) that the securities being sold contain restrictions on their resale. Rule 503 requires issuers to file a Form D with the SEC when they make an offering under Regulation D. In Rules 504 and 505, Regulation D implements §3(b) of the Securities Act of 1933 (also referred to as the '33 Act), which allows the SEC to exempt issuances of under $5,000,000 from registration. It also provides (in Rule 506) a "safe harbor" under §4(2) of the '33 Act (which says that non-public offerings are exempt from the registration requirement). In other words, if an issuer complies with the requirements of Rule 506, they can rest assured that their offering is "non-public," and thus that it is exempt from registration. Rule 507 penalizes issuers who do not file the Form D, as required by Rule 503. Rule 508 provides the guidelines under which the SEC enforces Regulation D against issuers. On April 5, 2012 President Obama signed into law The Jumpstart Our Business Startups Act, known as The Jobs Act, which for the first time in over 80 years relaxes investment securities offering rules first enacted during the Great Depression.