A startup raises $5 million through a Rule 506(b) offering from 30 accredited investors and 5 non-accredited but sophisticated investors. Six months later, the company realizes it forgot to file Form D with the SEC. What are the consequences?

Why C — Form D failure is a Reg D violation but does not by itself destroy the Rule 506 exemption

The SEC has taken the position that failure to file Form D does not automatically disqualify an offering from the Rule 506 exemption. Form D is a notice filing requirement, and while its timely filing (within 15 days of the first sale) is required, the exemption under Rule 506 is based on compliance with the substantive conditions of the rule, not the notice filing. However, failure to file Form D can result in SEC enforcement action, and some states may impose their own penalties for failure to file. The SEC could also consider the failure as part of a pattern suggesting the exemption conditions were not met.