What does a non-accredited investor receive before investing in a 506(b) fund?
Friends & family · Video 2 of 8 · 0:40 ·
Four things, before the sale: a disclosure document with financial statements (sometimes audited), a chance to ask questions and get answers, a summary of anything you gave accredited investors, and notice that they can't freely resell their interest. The list is the same whatever the amount invested.
Everything here is for educational purposes only and is not legal, tax or investment advice, or an offer to buy or sell any security. Laws and thresholds change and depend on your facts, so talk to a qualified attorney before acting.
Key facts
- A disclosure document, with financial statements; audit requirements depend on the offering size.
- An opportunity to ask questions and receive answers.
- A summary of written information given to accredited investors.
- Written notice of the limits on resale.
- The same list applies whatever the amount invested.
Transcript
Operator: Your cousin wants to invest $5,000, and she isn't accredited. Here's what she receives first.
Founder: What does she get?
Operator: If she isn't accredited, 506(b) lists four things she receives before she invests.
Operator: One: a disclosure document, with financial statements. Sometimes audited.
Operator: Two: a chance to ask you questions, and get answers.
Operator: Three: a summary of anything you gave accredited investors.
Operator: Four: notice that she can't freely resell her stake.
Founder: Does it change for a bigger check?
Operator: No. It's the same for $5,000 or $500,000. What matters is that she isn't accredited.
Founder: So four things, then she can invest.
Founder: So when my cousin wants in with $5,000...