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Non-public offerings are among the more common exceptions to the registration requirement. This exemption, sometimes referred to as the “private placement” exemption, is established by Section 4(a)(2) of the Securities Act, and generally applies to offerings in which purchasers are informed, “sophisticated investors” who have agreed not to resell the securities to the public.
Notwithstanding these general parameters, however, this exemption leaves much to interpretation, and thus a safe harbor is included in Rule 506 of Regulation D. In addition, in Rules 504-506, Regulation D sets forth some other common exceptions to registration, which generally turn on one or more of the following:
The JOBS Act (discussed in Section I.H., supra) required certain amendments to existing exemptions and creation of new ones to make it easier, particularly for smaller companies, to raise capital without SEC registration.