Series 79 practice questioneasyRegulation D
Under Regulation D Rule 506(b), what is the maximum number of non-accredited investors permitted in a private placement?
- AUp to 35 non-accredited investors who are sophisticated✓ Correct answer
- BNo non-accredited investors are permitted
- CUp to 100 non-accredited investors
- DThere is no limit on non-accredited investors
Explanation
Why A — Up to 35 non-accredited investors who are sophisticated
Rule 506(b) permits up to 35 non-accredited investors to participate in a private placement, provided they are 'sophisticated' investors with sufficient knowledge and experience in financial and business matters to evaluate the merits and risks of the investment. There is no limit on the number of accredited investors. When non-accredited investors participate, the issuer must provide specified disclosure documents similar to those in a registered offering, making the process more costly and time-consuming.
Turn it into reps
Reading one answer is not the same as being ready
Lucky the Banker is a free practice app with 477+ Series 79 questions, weak-area tracking, and timed mock exams. No credit card, no paywall.
Related Underwriting & New Financing questions
- What is the key difference between Rule 506(b) and Rule 506(c) offerings?
- Can a U.S. company use Regulation S to sell securities to overseas investors?
- Which of the following would constitute acceptable verification of accredited investor status under Rule 506(c)?
- Under Regulation S, what is the distribution compliance period for equity securities of a U.S. domestic issuer?