D offering is exempt from registration under the 1933 Act (and for the reasons discussed below will also be preempted from state regulation) if it meets the requirements set forth in this regulation, including, but not limited to, situations in which 1) the seller does not use general solicitation or advertising to market the securities; 2) the securities are sold to an unlimited number of accredited investors and up to 35 nonaccredited, but still sophisticated, investors; 3) purchasers receive "restricted" securities that cannot be traded freely in the secondary market after the offering; and 4) nonaccredited investors
receive disclosure documents specified in the rule.
Under the Rule 504 and Rule 505 exemptions, you can sell to a limited number of nonaccredited investors
, and you must "reasonably believe" that each of these investors has enough knowledge and experience in financial and business matters to evaluate the merits and risks of the investment, unless the investment is less than ten percent of the nonaccredited investor
's net worth.