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ARTICLE · 24 MARCH 2025

SEC Offers More Flexibility In Private Fundraising

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For a decade, SEC rules have permitted general solicitation in private offerings. However, this flexibility has been underutilized as a result of restrictive SEC guidance on verifying accredited investor status.

United StatesFinance and Banking
Karen Anderberg
Karen Anderberg
David P. Bartels
David P. Bartels
Tricia J. Lee
Tricia J. Lee
Michael W. McGrath
Michael W. McGrath
Laurel Neale
Laurel Neale
Derek Manners
Derek Manners
Grace Park
Grace Park

Key Takeaways

  • For a decade, SEC rules have permitted general solicitation in private offerings. However, this flexibility has been underutilized as a result of restrictive SEC guidance on verifying accredited investor status.
  • New SEC staff guidance clarifies that a high investment minimum, together with investor representations, can constitute "reasonable steps to verify" a purchaser's accredited investor status, a condition of offerings made in reliance on Rule 506(c) of Regulation D.
  • To take advantage of the new guidance, a purchaser must agree to a minimum investment amount ($200,000 for natural persons or $1,000,000 for legal entities) and make written representations (1) regarding its accredited investor status and (2) that its investment is not third-party financed. The issuer additionally must not have actual knowledge that the purchaser's representations are false.

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