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I have a question about Regulation D of the Securities Act.

Customer Question
Hi I have a...

Hi I have a question about Regulation D of the Securities Act. What if I accidentally invested in a security that’s designated for accredited investors only but I’m not an accredited investor now? What are the potential risks and outcomes?

Lawyer's Assistant: What state are you in? It matters because laws vary by location.

Jurisdiction will be Delaware.

Lawyer's Assistant: Has anything been filed or reported?

No

Submitted: 7 months ago.Category: Legal
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Answered in 17 minutes by:
12/20/2017
Lawyer: Law Educator, Esq., Attorney replied 7 months ago
Law Educator, Esq.
Category: Legal
Satisfied Customers: 125,887
Experience: JA Mentor -Attorney Labor/employment, corporate, sports law, admiralty/maritime and civil rights law
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Thank you for your question. I look forward to working with you to provide you the information you are seeking for educational purposes only. Please feel free to ignore any phone service request, the expert does not send those unless asked by customer and they are sent by the site automatically.

It does not matter if a non-accredited investor happens to invest in a Regulation D security, since these securities can have a small number of non-accredited investors and it does not harm their Regulation D status. As far as the purchaser of the securities, this has no bearing on their purchase, it has to to with the seller of the securities.

Please do not forget to leave positive feedback by clicking on the 5 stars at the top of your page, as the experts are not employees of the site and get no credit for spending time with customers unless they leave positive feedback. Thank you.

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Customer reply replied 7 months ago
Thank you for the quick response. This is helpful. Do you mind sharing a reference on where you got your answer from (e.g. specific paragraphs of regulations or court documents)? Nothing elaborate just a place I could reference would be fine.
Lawyer: Law Educator, Esq., Attorney replied 7 months ago

Thank you for your reply.

Rule 506b allows for up to 35 non-accredited investors. These regulations though are all on the company issuing the stock or raising the investment, not on the actual investor. See: https://www.sec.gov/fast-answers/answers-rule506htm.html

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