@Storm S. I suggest you ask the syndication attorneys about it. Maybe @KimLisa Taylor can chime in.
Thanks @Alina T. for your mention.
Rule 506(c) was designed to allow a Syndicator to advertise "an offering". It's not a carte blanche rule that allows anyone to advertise for investors without a specific offering.
Technically, for any Rule 506 offering (b or c) the Syndicator needs to file a Form D with the SEC within 15 days of when the first investor's funds become "irrevocably committed". State securities notices must also be filed where the investor claims residency.
Additionally, for a Rule 506(c) offering, the investor must provide verification that they are accredited. Any third party verification must have been completed within 90 days of the investment.
Hi @Storm S. - I have many clients who use Rule 506(c). You could advertise today, if you would like, with no offering documents in place and no FORM D yet filed. Everything under Rule 506(c) becomes critical only at the point of investment.
So what does this mean?
1. Before investing, an investor must receive proper documents such as a PPM, Subscription Agreement, and Operating Agreement.
2. At investment, the investor must "prove" they are an accredited investor either through their tax returns, a letter from a CPA, attorney, or RIA, or a third party verification service. If they are unable or unwilling to provide this, you cannot accept their subscription agreement.
3. You must file a FORM D in the state in which the investor resides 15 days within the acceptance of the subscription agreement. THIS IS VERY IMPORTANT AS THE ADVICE ABOVE NEGLECTS CERTAIN STATE REQUIREMENTS. If you are holding money in an escrow or bank account for closing DO NOT accept the subscription agreement until such time that you are closing on the property or your 15 days might (depending on the state) start ticking at the moment you accept that subscription agreement.
Also, for any advertising, always avoid the words "low risk, guaranteed, safe, and secure." Best of luck!
Thank you all for the replies, I was wondering if I needed to do a advance filing of form d submitted with advertising materials 15 days before I begin soliciting because a few years ago the sec proposed a ruling that required that but I couldn’t find anywhere on the internet that said if it got passed or not
It didn't get passed.
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