Regulation D Rule 506(c)
Rule 506(c) is a Regulation D exemption allowing public advertising of a private offering, but all investors must be accredited and their status verified.
Definition
Rule 506(c) is the Regulation D exemption that permits general solicitation, meaning a sponsor can openly advertise a private offering through websites, email, seminars, and media. This was created by the 2012 JOBS Act to make raising private capital easier.
The trade-off is stricter investor rules. Every purchaser must be an accredited investor, with no allowance for non-accredited participants, and the sponsor must take reasonable steps to verify each investor's accredited status, reviewing tax returns, bank statements, or a written confirmation from a CPA or attorney, rather than accepting a simple self-certification.
For investors, a 506(c) deal means you will likely be asked to document your income or net worth before investing. Sponsors choose 506(c) when they want to market broadly to reach new investors; many DST and Opportunity Zone sponsors still prefer 506(b) to avoid the verification burden when they already have investor relationships.
Key points
- Permits general solicitation and public advertising
- All investors must be accredited, with no non-accredited allowed
- Sponsor must take reasonable steps to verify accredited status
- Created by the 2012 JOBS Act
Related terms
Jerry Baker founded Baker 1031 Investments to help exchange investors move from active property ownership into passive, institutional-quality real estate through DST, 721 exchange, mineral royalty, and Opportunity Zone strategies. He holds the FINRA Series 22 and Series 63 registrations and the Securities Industry Essentials (SIE) qualification. Read full bio →
Reviewed by the Aurora Securities, Inc. compliance team — Aurora Securities, Inc., member FINRA/SIPC. Last reviewed July 2026. Securities are offered through Aurora Securities, Inc.; Baker 1031 Investments, LLC is independent of Aurora Securities, Inc.
This glossary entry is educational and is not investment, tax, or legal advice, or an offer to sell or a solicitation to buy any security. Definitions are general and may not reflect your specific circumstances — consult your own CPA and attorney. Past performance does not guarantee future results.