What Accredited Investors Should Know About Rule 506(c)

What Rule 506(c) is

Rule 506(c) is an exemption under Regulation D that lets a private fund raise capital without registering the offering with the SEC, while still following important investor-protection rules.

Public marketing is allowed

Unlike the older, quieter private-placement approach, 506(c) permits general solicitation: a fund can have a public website and talk openly about the opportunity. That is why this website can exist.

But only accredited investors can invest

The trade-off is that every investor must be an accredited investor, and the fund must take reasonable steps to verifythat status rather than simply taking the investor’s word for it. Accreditation is generally based on income, net worth, or certain professional credentials.

How verification differs

In a 506(c) offering, self-certifying that you are accredited is not enough. Expect to provide documentation, such as financial information or a letter from a qualified third party (for example, a CPA, attorney, or registered adviser), as part of onboarding.

What you’ll be asked for

After you express interest, the verification process collects the information needed to confirm eligibility. Sensitive financial details should be shared only through a secure process, not by ordinary email or a web form.

Why it protects everyone

Verification keeps a publicly marketed private offering limited to investors who meet the eligibility standards, which is central to how 506(c) is intended to work.