Rule 506 of Regulation D provides two exemptions from registration of an offering of securities with the SEC. An issuer offering securities pursuant to rule 506(b) cannot use general solicitation or advertising to market the securities. All the investors should be accredited investors. Issuers are required to file Form D with the SEC, comply with state Blue Sky laws, and bad actor disqualification provisions. Most SPVs use the 506(b) exemption because most SPV Organizers only invite investors to whom they have a pre-existing relationship. Rule 506 of Regulation D (506(b) and 506(c) Offering) is often paired with the 3(c)(1) and 3(c)(7) exemption.
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