Series 79 practice questionmediumRegulation D
Under Rule 506(c) of Regulation D, which is a requirement for issuers when selling to accredited investors?
- AIssuer must take reasonable steps to verify accredited investor status✓ Correct answer
- BInvestors can self-certify their status without documentation
- CIssuer must provide a prospectus to all investors
- DNon-accredited investors may participate if sophisticated
Explanation
Why A — Issuer must take reasonable steps to verify accredited investor status
Rule 506(c) requires the issuer to actively verify each investor’s accredited status, not just rely on self-certification. Providing a prospectus is not mandatory, and non-accredited investors are not permitted in 506(c) offerings. Mistaking 506(b) for 506(c) is a common error.
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