Regulation D Offerings: Sales to Accredited Investors Predominate

Issuers have an option to include non-accredited investors in a Rule 506(b) offering, but issuers generally do not.  Based on information collected from Form D filings, most participants are accredited. For example, in 2012, only 10% of new offerings include non‐accredited investors. Offerings by financial issuers and REITs are more likely to have non‐ accredited investors (14% of offerings have at least one such investor), while offerings by VC funds only rarely include non‐accredited investors (0.6% of offerings have at least one such investor). Although Rule 506 allows for the participation of non‐accredited investors, they only participated in 11% of the Rule 506 offerings conducted between 2009 and 2012. Only 8% of the offerings by fund issuers included non‐accredited investors, compared to 12% of the offerings by non‐fund issuers.

Adding non-accredited investors is burdensome. First, each non-accredited investor is required to be sophisticated. If the investor is not sophisticated, the investor needs an independent advisor who is sophisticated. Second and more burdensome, the issuer must provide each non-accredited investor Private Placement Memo containing a bundle of disclosures as mandated by an "information delivery requirement" in Rule 502 of Regulation D. Preparing that information may be costly (and may include the costs of obtaining an outside audit), time-consuming and difficult.

Services for Everyone

  • TRADE SECRETS

    A trade secret can be any valuable information - valuable for its technological or commercial applications - if the owner takes the appropriate ongoing and consistent efforts to protect: its secrecy. The Nick Yocca Law Firm intellectual property attorneys work closely with clients to identify and protect their trade secret assets. secrecy programs. confidentiality
    Read More
  • SECURITIES

    The Nick Yocca Law Firm’s Securities Group handles all types of securities issues for businesses or individuals: advice on insider trading. legal compliance programs. working with directors and officers insurance. issues concerning securities law disclosure obligations. internal investigations. government investigations (SEC, FINRA or state). Board or shareholder disputes. M&A, takeovers,
    Read More
  • CORPORATE

    Our practice includes clients in all stages of business, from advising startup companies in search of financing, to representing clients in transactions and ongoing capitalization efforts, to serving as counsel in ongoing corporate governance, succession planning, or mergers and acquisitions. The Nick Yocca Law Firm corporate attorneys have broad experience in
    Read More
  • REAL PROPERTY

    Real Estate Transactions Our real estate practice involves all aspects of real property for companies throughout their life cycle, from start-up to public company. acquisition. financing. development. construction. disposition. leasing. limited liability companies.
    Read More
  • ESTATE PLANNING

    We do trusts and estates.  Should I try to avoid probate? Do yourself and your family a favor and engage an expert estate or elder law attorney to do a proper estate plan for you.  Why is it always a good idea to have a will and living trust?  If
    Read More
  • PRIVACY AND CYBERLAW

    We help companies with compliance issues relating to privacy, cybersecurity,e-commerce, social media, advertising practices, consumer disclosures, warranties and other consumer protection matters. Crisis management strategies: Coordinating breach notification responses and other regulatory obligations Liaising with federal government, state law enforcement and regulatory officials Assisting companies with prompt and effective media
    Read More

Glossary Search

Search for glossary terms (regular expression allowed)