Regulation D Rule 504

For those of you who understand the reference. Rule 504 is a "Catch 22". It appears to be very favorable, but it is not. Here is why.

Though Rule 504 exempts you from the SEC enforcement, it requires that your Offering is sanctioned by at least one state. Meaning that your 504 Offering must be "approved" by one of the states. Remember under Regulation D you are only required to file a Form D notification, but there is "no SEC approval of your Offering required." However, Rule 504 does require that a state sanction or approve your Offering and as such all states require a full blown Offering Memorandum that must be submitted to them for approval. In effect, a Rule 504 Offering is much more onerous than a 506 Offering which only requires a filing. The individual states will tell you what information must be in the Offering and require that they review and approve your submission. An example would be requiring you to have certified financials in your Offering v Rule 506 requiring that you provide the investor with "All Material Information" but not telling you what is material. Your likely best choice of exemptions will be either Rule 506(b) or 506(c). One last tidbit: Regardless of whether you file under Rule 504 or any other exemption. You must still provide the investor with "All Material Information".

For those of you who wish to read Rule 504 here is the link. http://www.sec.gov/answers/rule504.htm

Private Placement Memorandum Explained. Click Here

Call Mr. Lance Shields at 239-300-9875  /  This email address is being protected from spambots. You need JavaScript enabled to view it.

Shields Capital Partners

3606 Enterprise Avenue

Naples, FL 34104

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