A little known and little used part of Regulation D under the
Securities Act is about to get some new attention. In what appears
to be a gift to the states after somewhat eviscerating their power
with the Regulation A+ changes, the SEC, on October 26, 2016,
approved final changes to Rule 504. This rule now allows raising up
to $5 million in an offering exempt from SEC registration, with as
many accredited and non-accredited investors as you would like. The
prior limit was $1 million.
There are two ways to use Rule 504. First, you can raise money
with no advertising or general solicitation, and not be required to
seek SEC or state approval; the securities issued will be
"restricted," in other words not able to be publicly
traded. Second, you can advertise and solicit,
and the stock can trade afterwards on the OTC Pink market,
if you go through a registration process in the states where you
are making offers. In that case, even though the stock trades, the
company
