The SEC's 2013 release keeps 506(b) fully intact

The record

The Securities and Exchange Commission adopted Release No. 33-9415 on 10 July 2013, implementing Section 201(a) of the Jumpstart Our Business Startups Act. The release's own summary states the new rule "permits an issuer to engage in general solicitation or general advertising in offering and selling securities pursuant to Rule 506, provided that all purchasers of the securities are accredited investors and the issuer takes reasonable steps to verify that such purchasers are accredited investors." The amendment took effect 23 September 2013, published in the Federal Register at 78 FR 44770. The release also revised Form D so issuers must state whether they relied on the general-solicitation option. The new provision was codified as Rule 506(c).

What the sources establish

The release's own text states directly that "issuers will continue to have the ability under Rule 506(b) to conduct Rule 506 offerings subject to the prohibition against general solicitation," and that the amendment adopted "does not amend or modify the requirements relating to existing Rule 506(b)." That establishes, in the rulemaking's own words, that Rule 506(c) is an additional option layered onto Regulation D, not a replacement for the pre-existing private-placement path: an issuer that wants to solicit publicly must use 506(c) and verify every purchaser's accredited status, while an issuer that prefers to avoid that burden, or that wants to sell to a limited number of sophisticated non-accredited investors under 506(b)'s older terms, may still do so. The release also states it includes "a non-exclusive list of methods" issuers may use to verify a natural person's accredited status, in response to commenters who asked for more certainty on that point.

Scope and revision

Release 33-9415 covers Rule 506 of Regulation D and a related change to Rule 144A; it was adopted alongside, but is legally distinct from, a separate same-day release on the Dodd-Frank Act's "bad actor" disqualification for Rule 506 offerings, not detailed here. The verification methods the release lists for natural-person purchasers are themselves described as non-exclusive and not mandatory, so an issuer may satisfy the "reasonable steps" standard by other means; this entry does not enumerate every method. Later staff guidance has refined how the standard is applied; this entry describes only the 2013 release and current rule text.

The decision in front of you

An issuer deciding between 506(b) and 506(c) is choosing between two different obligations the release itself frames as parallel, not sequential: 506(c) permits public marketing but requires verified-accredited-only purchasers, while 506(b) permits a limited number of sophisticated non-accredited purchasers but forbids general solicitation entirely. Which option fits a given raise is a structuring question for counsel, not one this record answers.

• Does a described raise state which subsection, 506(b) or 506(c), the issuer actually relied on?
• If general solicitation occurred, does the account describe how accredited status was verified, and by which method?
• Does a claim that "506(c) replaced 506(b)" match what the adopting release itself says about 506(b)'s continued availability?

The 2013 release added a new tool to Regulation D without retiring the old one; the release's language is explicit that both now sit side by side.