New Rules for Naming Accredited Investors

LOS ANGELES-According to the SEC, in July 2013, the commission adopted amendments to Rule 506 of Regulation D and Rule 144A under the Securities Act to implement the requirements of Section 201(a) of the JOBS Act. The JOBS Act requires the SEC to adopt rules amending existing exemptions from registration under the Securities Act of 1933 and creating new exemptions that permit issuers of securities to raise capital without SEC registration.

The two amendments, Rule 506(b) and Rule 506(c), allow for two ways a crowdfunding company can attract potential investors to their platform, according to David Manshoory, CEO and founder of Asset Avenue, an L.A.-based online marketplace that connects investors with real estate professionals to acquire commercial properties. Manshoory tells GlobeSt.com that Rule 506(b), which has actually been in existence for some time but has now been renamed, allows only accredited investors to see a specific deal, and they must self-certify by answering questions that identify themselves as accredited.