Glossary

Regulation D, Rule 506(b)

Also known as: Rule 506(b), 506(b)

A federal securities-registration exemption that prohibits general solicitation or public advertising, permitting an unlimited number of accredited investors plus up to 35 sophisticated non-accredited investors, generally relying on investor self-certification of accredited status.

506(b) is the traditional private-placement exemption most private CRE syndications historically relied on before Rule 506(c) existed: the issuer may only offer the deal to investors it has a pre-existing substantive relationship with or who arrive through a permitted, non-solicited channel, cannot publicly advertise the offering, and typically accepts an investor's own certification of accredited status rather than independently verifying it. The tradeoff for this restriction on solicitation is flexibility to include a limited number (up to 35) of sophisticated but non-accredited investors alongside accredited investors.