What is Regulation D?
Regulation D is a set of SEC rules that provide exemptions from the registration requirements of the Securities Act of 1933. Private funds — hedge funds, private equity funds, venture capital funds, and private credit vehicles — use Regulation D to raise capital without filing a full registration statement with the SEC.
The two most commonly used exemptions are Rule 506(b) and Rule 506(c). When you see a Form D filing, the exemption type tells you which rule the fund is using — and that tells you a lot about how the fund is structured and who its investors are.
Rule 506(b): The traditional private placement
Key characteristics:
- No general solicitation or advertising permitted
- Up to 35 non-accredited but "sophisticated" investors allowed
- Unlimited accredited investors
- No verification required — manager can rely on investor representations
What this means in practice:
A 506(b) offering is a true private placement. The manager cannot advertise the fund, publish marketing materials publicly, or otherwise generally solicit investors. Capital comes through existing relationships, placement agents operating under pre-existing relationships, or word of mouth within the manager's network.
The ability to accept up to 35 non-accredited sophisticated investors is rarely used in practice — most institutional fund managers want a clean LP base of accredited investors or qualified purchasers. But it provides flexibility.
When you see 506(b): This is the default for most established fund managers. It signals a traditional institutional fundraise — closed to the public, raised through relationships and placement agents.
Rule 506(c): General solicitation allowed
Key characteristics:
- General solicitation and advertising explicitly permitted
- All purchasers must be verified accredited investors (not just self-certified)
- Manager must take reasonable steps to verify accredited investor status
- No non-accredited investors permitted, even sophisticated ones
What this means in practice:
A 506(c) offering allows the fund to advertise publicly — on the internet, through social media, via public presentations. In exchange, the manager bears a higher burden of verifying that every investor is genuinely accredited.
506(c) is commonly used for:
- Feeder funds — offshore feeders or parallel vehicles that pool retail LP capital for a master fund
- Crowdfunded real estate vehicles — platforms like Fundrise use 506(c) to market to accredited investors publicly
- Emerging managers building a brand before their LP network is deep enough for traditional 506(b) placements
- Continuation vehicles where the manager is broadly marketing to new LP relationships
When you see 506(c): This is a meaningful signal. It suggests the fund either has a broader target LP base, is using general solicitation marketing, or is running through a placement platform. For a previously 506(b) manager switching to 506(c), it can indicate a change in distribution strategy.
Comparing 506(b) and 506(c)
| Feature | 506(b) | 506(c) |
|---|---|---|
| General solicitation | Not allowed | Allowed |
| Advertising | Not allowed | Allowed |
| Non-accredited investors | Up to 35 (sophisticated) | Not allowed |
| Investor verification | Self-certification OK | Active verification required |
| Typical use case | Institutional placement | Broader/public marketing |
| Feeder funds | Common | Common |
What allocators should watch for
A 506(b) manager filing a 506(c) amendment can indicate that the fund is broadening its distribution — either adding a placement agent with a larger retail network or launching a parallel vehicle for a different LP audience.
Consistent 506(b) filings from a recognized manager typically signal a traditional institutional raise — direct LP relationships, placement agent introductions, no public solicitation.
506(c) filings with small offering amounts in categories like real estate or private credit often represent feeder structures — aggregating smaller check sizes from individual accredited investors into a larger institutional vehicle.
Where to find exemption type data
Every Form D filing on SEC EDGAR discloses the exemption type under Item 6 ("Federal Exemption(s) and Exclusion(s) Claimed"). 37A Research parses and displays this in every filing summary at 37adot.com, along with the offering amount, fund type, and AI-generated analysis of what the exemption choice signals.