Series 79 practice questioneasyPrivate Placements
How does Rule 506(c) differ from Rule 506(b)?
- AIt allows sales to unlimited retail investors
- BIt prohibits any resale restrictions
- CIt permits general solicitation if all purchasers are accredited investors and the issuer takes reasonable steps to verify that status✓ Correct answer
- DIt applies only to municipal notes
Explanation
Why C — It permits general solicitation if all purchasers are accredited investors and the issuer takes reasonable steps to verify that status
It permits general solicitation if all purchasers are accredited investors and the issuer takes reasonable steps to verify that status Rule 506(c) trades broader marketing flexibility for a stricter accredited investor verification requirement. Issuers cannot simply rely on a box-checking representation if verification is required.
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