Series 79 practice questionmediumRegulation D
A Rule 506(b) private placement has 50 investors, including 8 non-accredited but sophisticated investors. Is this compliant?
- AYes, up to 35 non-accredited investors are allowed if sophisticated✓ Correct answer
- BNo, only accredited investors are allowed in 506(b)
- CNo, there is a limit of 10 non-accredited investors
- DNo, all investors must be QIBs
Explanation
Why A — Yes, up to 35 non-accredited investors are allowed if sophisticated
Rule 506(b) allows up to 35 non-accredited but sophisticated investors. Exceeding this number or requiring QIBs would violate the rule, and there is no 10-investor limit for this exemption.
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