Under Regulation D, Rule 505, of the Securities Act of 1933, which of the following statements is correct regarding a $3,000,000 stock offering sold only to accredited investors?
a. The issuer must notify the SEC within 15 days after the first sale of the offering.
b. The issuer must supply all accredited investors with financial information.
c. The issuer may sell the stock to only 35 accredited investors.
d. The issuer may make the offering through a general advertising.
Answer:A
Choice "a" is correct. This is a private offering because it is offered only to accredited investors. Therefore, Rules 504, 505, and 506 will apply. A general condition that applies to Rules 504, 505, and 506 is that the issuer must notify the SEC within 15 days after the first sale of the offering.
Choice "c" is incorrect. Rule 505 requires that the offering be made to no more than 35 unaccredited investors. There is no limit on the number of accredited investors in the offering.
Choice "d" is incorrect. General advertising is prohibited under Rules 504, 505, and 506.
Choice "b" is incorrect. The issuer does have to supply all investors with financial information if there are any unaccredited investors in the offering. When the offering is made only to accredited investors, no disclosures are required.