Regulation D

Regulation D is the set of SEC rules that let a company sell securities privately without registering them. There is no limit on how much can be raised and no SEC review of the offering document. In exchange, the sale is restricted to investors the rules consider able to look after themselves, and the shares are restricted from public resale. It is the oldest and most used exemption in real estate. Most syndications, most private real estate funds and most accredited-only fractional listings are Regulation D offerings.

Rule 506(b) allows unlimited accredited investors plus up to 35 sophisticated non-accredited investors, but forbids general advertising. The sponsor may only offer the deal to people it already has a relationship with. Investors self-certify their status. Rule 506(c), added in 2013, allows the sponsor to advertise publicly, on a website, in an email, on a platform, but every buyer must be accredited and the sponsor must verify it, usually with tax returns, bank statements or a letter from an accountant or lawyer. Fractional platforms that list accredited-only deals almost always use 506(c), because a public listing is advertising. That is why they ask for documents rather than a checkbox.

If you are not accredited, Regulation D deals are closed to you, and no platform can lawfully let you in. Look for Regulation A+ or Regulation Crowdfunding offerings instead. Threeworld marks listings that require accreditation so you can filter them out. If you are accredited, remember that the lighter rules cut both ways. There is no SEC review of the document, the sponsor sets the terms, and the shares are restricted for at least six months to a year. The private placement memorandum is the whole story, so read it in full.