On March 12, 2025, the SEC published several updates to its compliance and disclosure interpretations (“CD&I”) related to exempt offerings. Two of the new C&DI clarify acceptable processes for verifying accredited investor status in a Rule 506(c) offering. On the same day the SEC issued no-action relief providing further detail on affirming accredited investor status. Part 1 of this blog series discussed the two rule 506(c) C&DI and no action letter – see HERE. This Part 2 will continue a review of the remaining substantive CD&I.
Confidential Filing of Form 1-A
Modified CD&I question 182.01 confirms that when a confidentially filed Form 1-A is made public by choosing “Disseminate Draft Offering Statement” in the EDGAR database, it will have satisfied the requirements to make prior confidential information public. The prior CD&I on this topic required an issuer to file, as an exhibit to its public Form 1-A, any related non-public correspondence. The SEC will now undertake to make all confidential filings, including correspondence, public once the selection is made in the EDGAR system.
Modified CD&I 182.02 confirms that any confidential non-public correspondence or related information will be made public, together with the public filing of a prior confidential Form 1-A, unless a company specifically seeks confidential treatment pursuant to Rule 83. The process requires that the company submit a redacted copy of the correspondence via EDGAR, with the appropriate legend indicating that it was being submitted pursuant to a confidential treatment request under Rule 83. At the same time, it would submit an unredacted version to the SEC, non-publicly on EDGAR, in the manner required by Rule 83. For more on Rule 83 see HEREl.
Re-Sale Blue Sky Requirements in Regulation A
Modified CD&I 182.10 confirms that state securities law registration and qualification requirements are not federally pre-empted for the re-sale of securities initially sold in a Tier 2 Regulation A offering. State securities law registration and qualification requirements are only preempted with respect to primary offerings of securities by the issuer or secondary offerings by selling securityholders that are qualified pursuant to Regulation A and offered or sold to qualified purchasers pursuant to a Tier 2 offering.
Regulation D for Foreign Issuers
CD&I 254.02 confirms that Regulation D is available by foreign issuers. The revision of this CD&I simply removed extraneous language, maintaining the substantive view that Regulation D is available for foreign issuers.
Rule 506(b) Offerings
As a backdrop, Rule 506(b) allows offers and sales to an unlimited number of accredited investors and up to 35 unaccredited investors in any 90-day period – provided, however, that if any unaccredited investors are included in the offering, certain delineated disclosures, including an audited balance sheet and financial statements, must be provided to potential investors. Rule 506(b) prohibits the use of any general solicitation or advertising in association with the offering.
Modified CD&I 255.33 addresses whether non-U.S. investors need to be counted in calculating whether the company has exceeded the 35 non-accredited investor limit. The SEC points out that an issuer may conduct concurrent Regulation D and Regulation S offerings and to the extent that non-U.S. investors participate in the Regulation S offering, they do not need to be counted in relation to the Regulation D offering. However, if the issuer determines to rely on Regulation D for offers and sales to non-U.S. investors, they must be counted towards the 35 non-accredited investor limit.
Modified CD&I 256.15 confirms that a Canadian issuer may use financial statements prepared in accordance with IFRS (such as those contained in an NJDS filing) to satisfy the financial statement requirements in a 506(b) offering.
Modified CD&I 234.02 adds risk to the use of a representative who advises unsophisticated participants in the offering and thus furnishes the business sophistication required by Section 4(a)(2) that the participants lack personally. In particular, the SEC notes that because of the lack of no-action letters and other guidance on the subject, the SEC will not express a view as to whether the use of such representative is an acceptable means of satisfy the sophistication requirement of Section 4(a)(2).
Offering Communications
Modified CD&I 256.27 addresses permitted communications that will not be deemed a general solicitation in a Rule 506(b) offering. In addition to allowable “demo days” under Rule 148 and solicitations of interest under Rule 241, a company may communicate with prospective investors who are members an informal, personal network of individuals with experience investing in private offerings (such as angel investor groups) without such communication being deemed a general solicitation. However, issuers should keep in mind that whether there is a general solicitation is fact specific and in general, the greater the number of persons without financial experience, sophistication or any prior personal or business relationship with the issuer that are contacted by an issuer or persons acting on its behalf through impersonal, non-selective means of communication, the more likely the communications are part of a general solicitation.
Modified CD&I 256.33 confirms that communications made at a demo day or venture fair in compliance with Rule 148 will not constitute a general solicitation. If the requirements of Rule 148 are not met, the issuer will need to complete a facts and circumstances analysis to determine if there has been a general solicitation.
For more information on offering communications see HERE and HERE.
Regulation Crowdfunding
Modified CD&I 100.01 confirms that, subject to certain communications, an issuer may communicate both orally and in writing, at any time prior to filing a Form C, to solicit interest in a contemplated offering. These communications are deemed to be offers of a security for purposes of the antifraud provisions of the Federal securities laws.
Pursuant to Rule 206, the issuer must clearly state that (i) no money or other consideration is being solicited, and if sent, will not be accepted; (ii) no offer to buy securities can be accepted and no part of the purchase price can be received until the offering statement is filed and only through an intermediary’s platform; and (iii) a prospective purchaser’s indication of interest involves no obligation or commitment of any kind. Rule 201(z) requires that all such communications be filed with the SEC with the Form C.
Similarly, if the issuer has not determined which offering exemption it intends to rely, Rule 241 allows solicitations of interest using substantially similar legends.
Of course, an issuer may communicate about its business in general, but when doing so in advance of an offering, it should consider that the SEC interprets the term “offer” broadly. The publication of information and publicity efforts, made in advance of a proposed financing which have the effect of conditioning the public mind or arousing public interest in the issuer or in its securities constitutes an “offer.”
Modified CD&I 100.02 confirms that entities and other non-natural person, that invest in a Regulation Crowdfunding offering are subject to the same terms and investment limits as those that apply to natural persons. Accredited investors are not subject to investment limits in Regulation Crowdfunding offerings.
Modified CD&I 204.01 confirms that an issuer may advertise the “terms of the offering” when conducting a Regulation Crowdfunding offering. However, subject to compliance with Rule 204, any such communications should be channeled through the intermediary on the intermediary’s platform.
The Author
Laura Anthony, Esq.
Founding Partner
Anthony, Linder & Cacomanolis
A Corporate and Securities Law Firm
Securities attorney Laura Anthony and her experienced legal team provide ongoing corporate counsel to small and mid-size private companies, public companies as well as private companies going public on the Nasdaq, NYSE American or over-the-counter market, such as the OTCQB and OTCQX. For more than two decades Anthony, Linder & Cacomanolis, PLLC has served clients providing fast, personalized, cutting-edge legal service. The firm’s reputation and relationships provide invaluable resources to clients including introductions to investment bankers, broker-dealers, institutional investors and other strategic alliances. The firm’s focus includes, but is not limited to, compliance with the Securities Act of 1933 offer sale and registration requirements, including private placement transactions under Regulation D and Regulation S and PIPE Transactions, securities token offerings and initial coin offerings, Regulation A/A+ offerings, as well as registration statements on Forms S-1, S-3, S-8 and merger registrations on Form S-4; compliance with the Securities Exchange Act of 1934, including registration on Form 10, reporting on Forms 10-Q, 10-K and 8-K, and 14C Information and 14A Proxy Statements; all forms of going public transactions; mergers and acquisitions including both reverse mergers and forward mergers; applications to and compliance with the corporate governance requirements of securities exchanges including Nasdaq and NYSE American; general corporate; and general contract and business transactions. Ms. Anthony and her firm represent both target and acquiring companies in merger and acquisition transactions, including the preparation of transaction documents such as merger agreements, share exchange agreements, stock purchase agreements, asset purchase agreements and reorganization agreements. The ALC legal team assists Pubcos in complying with the requirements of federal and state securities laws and SROs such as FINRA for 15c2-11 applications, corporate name changes, reverse and forward splits and changes of domicile. Ms. Anthony is also the author of SecuritiesLawBlog.com, the small-cap and middle market’s top source for industry news, and the producer and host of LawCast.com, Corporate Finance in Focus. In addition to many other major metropolitan areas, the firm currently represents clients in New York, Los Angeles, Miami, Boca Raton, West Palm Beach, Atlanta, Phoenix, Scottsdale, Charlotte, Cincinnati, Cleveland, Washington, D.C., Denver, Tampa, Detroit and Dallas.
Ms. Anthony is a member of various professional organizations including the Crowdfunding Professional Association (CfPA), Palm Beach County Bar Association, the Florida Bar Association, the American Bar Association and the ABA committees on Federal Securities Regulations and Private Equity and Venture Capital. She is a supporter of several community charities including the American Red Cross for Palm Beach and Martin Counties, Susan Komen Foundation, Opportunity, Inc., New Hope Charities, the Society of the Four Arts, the Norton Museum of Art, Palm Beach County Zoo Society, the Kravis Center for the Performing Arts and several others.
Ms. Anthony is an honors graduate from Florida State University College of Law and has been practicing law since 1993.
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