Viking Capital Disclaimer
Rule 506c of Regulation D
Section 201(a) of the JOBS Act requires the SEC to eliminate the prohibition on using general solicitation under Rule 506 where all purchasers of the securities are accredited investors and the issuer takes reasonable steps to verify that the purchasers are accredited investors.
To implement Section 201(a), the SEC adopted paragraph (c) of Rule 506. Under Rule 506(c), issuers can offer securities through means of general solicitation, provided that:

  • all purchasers in the offering are accredited investors;
  • the issuer takes reasonable steps to verify their accredited investor status; and
  • ​certain other conditions in Regulation D are satisfied.
An “accredited investor” includes a natural person who:
  • earned income that exceeded $200,000 (or $300,000 together with a spouse) in each of the prior two years, and reasonably expects the same for the current year; or
  • has a net worth of over $1 million, either alone or together with a spouse (excluding the value of the person’s primary residence).
An “accredited investor” may also be an entity such as a bank, partnership, corporation, nonprofit or trust, when the entity satisfies certain criteria. The full definition of “accredited investor” is available here. The JOBS Act requires that issuers wishing to engage in general solicitation take “reasonable steps” to verify the accredited investor status of purchasers. Rule 506(c) sets forth a principles-based method of verification which requires an objective determination by the issuer (or those acting on its behalf) as to whether the steps taken are “reasonable” in the context of the particular facts and circumstances of each purchaser and transaction. Among the factors that an issuer should consider under this principles-based method are:
  • the nature of the purchaser and the type of accredited investor that the purchaser claims to be;
  • the amount and type of information that the issuer has about the purchaser; and
  • ​the nature of the offering, such as the manner in which the purchaser was solicited to participate in the offering, and the terms of the offering, such as a minimum investment amount.
In addition to this flexible, principles-based method, Rule 506(c) includes a non-exclusive list of verification methods that issuers may use, but are not required to use, when seeking greater certainty that they satisfy the verification requirement with respect to natural person purchasers. This non-exclusive list of verification methods consists of:
  • verification based on income, by reviewing copies of any Internal Revenue Service form that reports income, such as Form W-2, Form 1099, Schedule K-1 of Form 1065, and a filed Form 1040;
  • ​verification on net worth, by reviewing specific types of documentation dated within the prior three months, such as bank statements, brokerage statements, certificates of deposit, tax assessments and a credit report from at least one of the nationwide consumer reporting agencies, and obtaining a written representation from the investor;
  • ​a written confirmation from a registered broker-dealer, an SEC-registered investment adviser, a licensed attorney or a certified public accountant stating that such person or entity has taken reasonable steps to verify that the purchaser is an accredited investor within the last three months and has determined that such purchaser is an accredited investor; and
  • a method for verifying the accredited investor status of persons who had invested in the issuer’s Rule 506(b) offering as an accredited investor before September 23, 2013 and remain investors of the issuer.
Rule 506(b) remains unchanged following the adoption of Rule 506(c) and continues to be available for issuers that wish to conduct a Rule 506 offering without the use of general solicitation or that do not wish to limit sales of securities in the offering to accredited investors.
Disclaimer
This website is neither an offer to sell nor the solicitation of an offer to buy any security. Only the offering documents, including, without limitation, private placement memorandum, partnership agreement, subscription agreement, and ancillary documents and questionnaires (the "Offering Documents") can make such an offer. Therefore, a copy of the Offering Documents must be made available to you in connection with the offering. The information and material on this site must be read in conjunction with the Offering Documents in order to understand fully all of the implications and risks of the offering of securities to which it relates.
To understand offering fully, you should read the entire Offering Documents carefully, including the “Risk Factors” sections, before making a decision to invest. Offering Documents will only be made available to potential investors who are properly verified as accredited investors. Carefully review these documents prior to making an investment decision.
Risks may include loss of principal or the possibility that at expiration the investor will own the reference asset at a depressed price. Securities discussed in this material are not registered with the SEC but are issued pursuant to an exemption from registration. Potential investors should contact their own accounting, tax or legal advisors to review the suitability of any investment. Investment are issued as non-registered securities. Non-registered securities are exempt from SEC registration and are issued under the JOBS ACT, Regulation D, Section 506(c).
It is important to note that private offerings of this nature are complex and best intended for sophisticated investors, and may have high costs of ownership, such as origination and brokerage fees. Private investments carry certain unique risks which should be carefully considered and fully understood by individual investors before investing.
Viking Capital Investments, LLC is not a broker/dealer, does not give legal or accounting advise, and does not sell securities or give any investment advice.
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© 2021 | Viking Capital, LLC 
© 2021 | Viking Capital, LLC