Lex Luthor Presents

[Lex_Luthor]

The exemptions themselves are contained in §504 (issues of $1 million or less), §505 (issues of $5 million or less), and §506 (all other issues).

The antifraud provisions still apply to all transactions, and therefore Reg. D does not do away with the necessity for disclosure (although disclosure requirements are relaxed in some instances). It is also important to note that the burden of qualifying for the exemption has not been shifted; it is still up to the issuer and its advisers to make certain that each of the requirements of Reg. D has been complied with. However, the SEC has caved in to the argument that substantial compliance should be enough to maintain the exemption's applicability. In sum, not only is Reg. D an enormous help to issuers and their counsel, but the SEC has also been forthcoming in explaining the rule. In a release published on March 3, 1983, the staff issued an extensive interpretation in question-and-answer format. A number of no-action letters have further fleshed out the bar's insights into the staff's views. Reg. D itself is, as rules go, quite specific; it's possible, indeed, for a layman to understand the major provisions of the rule simply by reading it. Since its original promulgation in 1982, there have been a number of relaxing improvements. Thus, in 1988 the definition of "accredited investor" was enlarged, and the Rule 504 exemption ostensibly increased from $500,000 to $1 million. In 1989, the SEC de-emphasized the filing of Form D (no longer a condition to the exemption, although still required to be filed); adopted a change to the effect that, in Rule 505 and 506 offerings with both accredited and non-accredited investors, the specified information need only be supplied to the non-accredited investors (one wonders what lawyer would be brave enough to furnish material to some but not all investors in a placement); and finalized Rule 508, the "excuse me" or "innocent and immaterial" (I & I) rule, which allows issuers to be forgiven for committing violations of Reg. D which are "insignificant" and occur despite a "good-faith attempt" to comply. And, in 1992, as part of the Small Business Initiative, the limit on the Rule 504 exemption was effectively raised to $1 million, and securities issued in Rule 504 transactions are no longer "restricted" securities.


For more info, visit this link that was found on Char's Board.
http://vcexperts.com/vce/library/encyclopedia/documents_view.asp?document_id=89