Series 79 practice questionmediumRegulation D
In a Regulation D Rule 506(b) offering, what is the consequence if more than 35 non-accredited investors participate?
- AThe offering can proceed if all investors acknowledge the risks in writing
- BThe offering must be registered with the SEC
- CThe issuer must file a special waiver with FINRA
- DThe issuer loses the Regulation D exemption for the entire offering✓ Correct answer
Explanation
Why D — The issuer loses the Regulation D exemption for the entire offering
Exceeding the limit voids the exemption, requiring registration of the whole offering. The trap is thinking waivers or disclosures can cure this defect, which they cannot.
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