Exempt Offerings: A Reader Checklist for US Securities
A practical checklist for identifying which SEC registration exemption an offering cites, and what to confirm for Rules 504, 506(b), 506(c), crowdfunding, Regulation A, Rule 147 and Rule 701.
Every offer and sale of securities must either be registered under the Securities Act of 1933 or rely on an available exemption from registration. That single rule is the starting point for any reader trying to check whether an offering is described correctly. The steps below turn that rule into a short verification routine.
Step 1: Find the exemption named
A legitimate offering document should name the exemption it relies on rather than gesture at "private placement rules" in general. The SEC's own overview groups these exemptions together and provides a high-level summary chart, but the chart is a summary — not a substitute for the underlying rule text.
Ask which of the following labels appears, and write it down exactly: Rule 504, Rule 506(b), Rule 506(c), Regulation Crowdfunding, Regulation A, Rule 147 or Rule 147A, or Rule 701.
Step 2: Match the label to its stated condition
Each exemption carries a condition that should appear in the offering materials. Where the label and the condition disagree, treat that as a question rather than a conclusion.
- Rule 506(b): transactions by an issuer not involving any public offering, limiting sales to no more than 35 non-accredited investors in any 90 day period.
- Rule 506(c): permits general solicitation where all purchasers are accredited investors and the issuer takes reasonable steps to verify that the purchasers are accredited investors.
- Rule 504: permits the offer and sale of up to $10 million of securities in a 12-month period, and is often used for regional (multi-state) offerings. If the raise is stated above that, ask which exemption or aggregation rules apply rather than assuming the figure is simply excess.
- Regulation Crowdfunding: enables certain companies to offer and sell securities on an internet based platform through an intermediary that is a registered broker-dealer or registered funding portal.
- Regulation A: an exemption from registration for public offerings, although offerings made under it share many characteristics with registered offerings.
- Rule 147 and Rule 147A: a safe harbor under Section 3(a)(11) and the intrastate offering exemption, permitting companies to raise money from investors within their state without concurrently registering the offers and sales at the federal level.
- Rule 701: exempts certain sales of securities made to compensate employees, consultants and advisors in a non-capital raising transaction, and is not available to Exchange Act reporting companies.
Step 3: Check the notice obligation
For offerings relying on Rule 506(b), Rule 506(c) or Rule 504, a Form D notice is required within 15 days after the first sale of securities. The SEC does not charge any filing fee for a Form D notice or amendment, and notices and amendments must be filed online using EDGAR.
That timing is easy to overlook because it runs from the first sale, not from the announcement of the offering. If a reader is checking a deal after the fact, the question to ask is whether a Form D appears at all.
| Exemption | Key condition to confirm | Form D noted |
|---|---|---|
| Rule 506(b) | No public offering; no more than 35 non-accredited investors in any 90 day period | Yes, within 15 days after first sale |
| Rule 506(c) | General solicitation permitted; all purchasers accredited; reasonable verification steps | Yes, within 15 days after first sale |
| Rule 504 | Up to $10 million in a 12-month period; often regional (multi-state) | Yes, within 15 days after first sale |
| Regulation Crowdfunding | Internet-based platform; registered broker-dealer or registered funding portal intermediary | Not addressed in this summary |
| Regulation A | Public offering exemption sharing many characteristics with registered offerings | Not addressed in this summary |
| Rule 147 / 147A | Offers and sales within the issuer's state; no concurrent federal registration | Not addressed in this summary |
| Rule 701 | Compensatory sales to employees, consultants and advisors; not a capital raise; not for Exchange Act reporting companies | Not addressed in this summary |
A worked example
Suppose a reader is handed a short memo describing a raise of $12 million described as a Rule 504 offering. Hypothetical: taking the stated facts at face value, the amount sits above the $10 million 12-month figure named for Rule 504. The useful next question is not "how is the extra $2 million explained" but "which exemption, or which combination or aggregation of offerings, is actually being relied on." That reframing keeps the reader on the source's own terms.
Calculation: the $2 million gap above is arithmetic only, derived by subtracting the Rule 504 figure from the hypothetical raise. It does not establish any conclusion about the offering.
Reader checklist
- Write down the exemption named in the document, exactly as written.
- Confirm the document describes the condition attached to that exemption, not just the label.
- For 506(b), look for both the no-public-offering condition and the 35 non-accredited investor / 90 day limit.
- For 506(c), look for the accredited-investor statement and for a described verification step.
- For 504, compare the raise with the $10 million 12-month figure and, if it appears larger, ask which exemption or aggregation rules apply.
- For crowdfunding, identify the intermediary and whether it is described as a registered broker-dealer or registered funding portal.
- For Regulation A, confirm the offering type described rather than treating it as a private placement.
- For 147 and 147A, confirm the in-state framing of the offers and sales.
- For 701, confirm the compensatory, non-capital-raising purpose and check whether the issuer is an Exchange Act reporting company.
- For 506(b), 506(c) or 504, look for a Form D filed within 15 days after the first sale.
Status: what is announced versus what is imposed
The exemptions described here are existing features of the federal framework, not new proposals or pending approvals. That distinction matters for readers who encounter a deal marketed as being under a "new" exemption: the labels above should be checked against what is actually filed and described.
What the source does not say
The overview does not set out the full text of any rule, the accredited investor definition, state-level requirements, penalties for a defective Form D, or the conditions for obtaining a waiver of "bad actor" disqualification — the source raises that question without answering it in the summary.
It also does not say that any particular offering is compliant, that an exemption has been confirmed by the SEC, or how a reader should evaluate the merits of an investment. Nothing here should be read as a conclusion about a specific issuer, and this checklist cannot confirm that a given deal qualifies.
Sources
Informational only. Not financial, legal or investment advice. Check the primary sources listed above before you act on anything here.