Summary. A private placement exemption is not a form you file; it is a set of conditions satisfied before the first offer goes out, and most failures happen in the first week. This checklist walks the governing decision — whether the offering uses general solicitation — and the requirements that follow: accredited status and the Rule 506(c) verification standard, the bad actor inquiry, integration, and disclosure obligations that exist whether or not a PPM is required. Later phases cover closing mechanics, Form D and state notice filings, legends, and ongoing obligations.

What this checklist is for. Running a Regulation D offering correctly from the first conversation. Securities work is jurisdictionally exacting; use it with counsel, not instead of counsel.

Phase 1 — Threshold decisions

  • Confirm the instrument is a security — equity, notes, SAFEs, convertible notes, LLC interests, and revenue shares generally are. SEC v. W.J. Howey Co., 328 U.S. 293 (1946); Reves v. Ernst & Young, 494 U.S. 56 (1990).
  • Choose the exemption: Rule 506(b), Rule 506(c), Rule 504, Regulation A, Regulation CF, Rule 701 (compensatory), or Section 4(a)(2) standing alone. 17 C.F.R. §§ 230.500-230.508.
  • Decide whether general solicitation will be used. This is the single most consequential decision, and it cannot be undone after the fact.
  • Note the trade-off: 506(b) permits up to 35 non-accredited purchasers who meet the sophistication standard but prohibits general solicitation; 506(c) permits general solicitation but requires all purchasers to be accredited and requires reasonable steps to verify.
  • Confirm both 506(b) and 506(c) provide federal preemption of state registration under Section 18, leaving only notice filings and fees.
  • Run the integration analysis under Rule 152, 17 C.F.R. § 230.152, including the 30-day safe harbor and the general principles test, before starting a second offering.
  • Confirm no prior general solicitation has already occurred — a pitch competition, a public LinkedIn post, a demo day open to the public, or a mass email to a purchased list may foreclose 506(b).

Phase 2 — Bad actor disqualification

  • Identify every covered person under Rule 506(d): the issuer, predecessors, affiliated issuers, directors, executive officers, other officers participating in the offering, 20 percent beneficial owners, promoters, investment managers of pooled funds, and any compensated solicitor and its principals.
  • Obtain a signed bad actor questionnaire from each covered person.
  • Run independent checks: SEC and state regulatory actions, FINRA BrokerCheck and the IAPD, criminal records, and court dockets.
  • Assess whether any disqualifying event occurred, and whether it predates September 23, 2013 — pre-existing events do not disqualify but must be disclosed in writing to purchasers a reasonable time before sale, Rule 506(e).
  • Document the reasonable care exercised, which is the defense where a disqualifying event was not known and could not have been known despite reasonable care.
  • Refresh the inquiry before each closing in a rolling offering.

Phase 3 — Investor qualification

  • Confirm each investor's accredited investor status under Rule 501(a), 17 C.F.R. § 230.501(a): income over $200,000 individually or $300,000 jointly in each of the two most recent years with a reasonable expectation of the same; net worth over $1 million excluding the primary residence; entity categories; knowledgeable employees of private funds; and the professional certification categories (Series 7, 65, and 82 holders).
  • Note that the net worth calculation must subtract any increase in mortgage debt on the primary residence in the preceding 60 days, and must include any mortgage debt exceeding the residence's fair value.
  • For 506(b), obtain investor representations and a suitability questionnaire; if any non-accredited investor participates, confirm the purchaser (alone or with a purchaser representative) has the required knowledge and experience.
  • For 506(c), take reasonable steps to verify — this requires more than a checkbox. Use the non-exclusive safe harbors: tax returns plus a written representation on income; bank, brokerage, and credit report documentation on net worth; or a written confirmation from a registered broker-dealer, registered investment adviser, licensed attorney, or CPA. Note the SEC's position permitting reliance on a minimum-investment-amount plus written representations in narrow circumstances.
  • Retain the verification documentation or the third-party confirmation letters.
  • Screen against OFAC lists and satisfy AML/KYC obligations where applicable.
  • For 506(b) offerings with non-accredited investors, prepare the information required by Rule 502(b) — including audited financial statements at some offering sizes. This requirement alone is why most 506(b) offerings sell only to accredited investors.

Phase 4 — Offering documents

  • Prepare a private placement memorandum where required or prudent. It is not required for an all-accredited offering, but antifraud liability applies regardless, so most issuers prepare one.
  • Draft risk factors that are specific, not generic — a boilerplate risk section is a liability, not a shield.
  • Describe the business, use of proceeds, capitalization, dilution, management, related-party transactions, and material litigation accurately.
  • Ensure financial statements are consistent with the narrative and appropriately labeled if unaudited.
  • Review any projections for reasonable basis, and label assumptions.
  • Prepare the subscription agreement with investor representations, accreditation certification, transfer restrictions, and the risk acknowledgment.
  • Prepare the equity documents: stock purchase agreement or note/SAFE, charter amendments, investors' rights, voting, and right of first refusal and co-sale agreements as applicable.
  • Confirm consistency between the deck, the PPM, the website, and what founders say in meetings. Oral statements are actionable; a disclaimer in a PPM does not cure a contradictory verbal promise.
  • Confirm the antifraud baseline: Section 17(a) of the Securities Act, Section 10(b) and Rule 10b-5, and Section 12(a)(2) exposure. See Basic Inc. v. Levinson, 485 U.S. 224 (1988), on materiality.
  • Confirm anyone selling the securities for compensation is a registered broker-dealer or fits an exemption; finder's fees to unregistered persons create rescission and enforcement risk.

Phase 5 — Closing and filings

  • Confirm subscription documents are complete, signed, and dated, and that funds have cleared.
  • Confirm board and stockholder approvals, and that sufficient authorized shares exist.
  • Update the capitalization table and issue certificates or book entries with the restrictive legend.
  • File Form D within 15 days of the first sale, 17 C.F.R. § 230.503, and file amendments annually for continuing offerings and on material change.
  • Make state notice filings (blue sky) in each state where a purchaser resides, within each state's deadline and with its fee. Deadlines vary; several run from the first sale in that state.
  • Confirm any required filing for Rule 506(c) general solicitation materials under state or platform rules.
  • Deliver executed documents to investors and retain the complete file.

Phase 6 — After the closing

  • Track Rule 144 holding periods and the conditions for resale of restricted securities; confirm the transfer agent and legend removal process.
  • Honor information rights granted in the investors' rights agreement.
  • Comply with Section 12(g) holder-of-record thresholds if the investor count grows.
  • Maintain the corporate formalities that support the entity's separateness. See Corporate Formalities and Veil Protection Checklist.
  • Refresh the bad actor inquiry before any subsequent offering.
  • Run a fresh integration analysis before the next round.
  • Preserve the entire offering file — questionnaires, verification materials, drafts, and communications — for the limitations period.

Common mistakes

  • General solicitation before deciding on 506(b), which forecloses the exemption.
  • Checkbox "verification" in a 506(c) offering, which is not verification.
  • Skipping the bad actor questionnaire, then discovering a disqualifying event.
  • Missing the 15-day Form D deadline or the state notice filings.
  • Paying a finder who is not a registered broker-dealer.
  • Generic risk factors and inconsistent projections.
  • Accepting a non-accredited investor into a 506(b) offering without the Rule 502(b) information package.
  • Starting a new round without an integration analysis.
  • No legend on the certificates.

Primary authority

Related

This checklist is educational and not legal advice. Securities offerings are governed by federal and state law with unforgiving deadlines and personal liability exposure. Do not run an offering without qualified securities counsel.