Regulation D


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Regulation D

There are two Regulation Ds. First, it refers to the exemption from the Securities Act of 1933 for Private Placements. These placements are exempt from registration and prospectus delivery requirements. Second, it refers to a Federal Reserve Board regulation that currently requires member banks to hold reserves against their net borrowings from foreign offices of other banks over a 28-day averaging period. Regulation D has been merged with Regulation M.

Regulation D

An SEC regulation governing an issue of securities for private placement. Private placement involves selling securities without registering with the SEC. Regulation D requires that those offering must file a private placement memorandum (PPM) explaining exactly why the offering complies with SEC Regulation D exempting certain companies from registration; this is done to protect both the issuer and the investors. According to Regulation D, a PPM must contain a complete description of the security and the terms of the sales. It must also include applicable information about the issuer's financial situation and applicable risk factors. Regulation D securities are not subject to the same oversight that other issues must follow.

Regulation D

An SEC regulation that permits some smaller companies to offer and sell securities without registering the transaction. The regulation applies to companies that seek to raise less than $1 million in a 12-month period and to companies that raise up to $5 million so long as the securities are sold to accredited investors or to 35 or fewer individuals.

Regulation D.

Both the Securities and Exchange Commission (SEC) and the Federal Reserve have regulations known as Regulation D.

The SEC's Regulation D specifies which securities can be sold within the United States without having to be registered with the Commission.

Among the other restrictions, these securities can be made available only to accredited investors -- individuals with a net worth of at least $1 million or an annual income of $200,000 or more, and institutions with assets of $5 million or more.

The Federal Reserve's Regulation D sets the requirements for depositary institutions, including the amount of cash the bank must hold in reserve and the number of transfers or withdrawals permitted for a savings account -- which is six transfers every four week cycle with no more than three by check or electronic payment.

Regulation D (Reg D)

A Securities and Exchange Commission regulation that can apply to real estate investments that constitute a security. Reg D provides two types of limited offering exemptions from the registration requirements of federal securities laws,neither of which are dependent on the nature or sophistication of the purchaser.The first exemption is for offerings of up to $1 million and an unlimited number of purchasers;the other is for offerings of up to $5 million to a limited number of investors. It also allows exemptions for private offerings to accredited investors or to a small number of sophisticated investors.Even if an offering is exempt under Reg D,the company must still file a Form D with the SEC, providing the names and addresses of the company's owners and stock promoters. If investors are offered a Reg D investment, they should check with the SEC (publicinfo@sec.gov) to see if a form is on file;the lack of a Reg D form may be a warning of possible illegality in the investment. (These are important safe harbors to the real estate investor and developer because sales of interests in real estate-related businesses can constitute securities. The full text may be found at 17 CFR 230.504 through 506,retrievable at the U.S.Government Printing Office Web site at www.gpoaccess.gov/cfr/retrieve.html.)

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