On March 12, 2025, the Securities and Exchange Commission (SEC) issued a no-action letter that establishes a clear path to compliance with the “accredited investor” verification steps required to engage in general advertising and solicitation in reliance on the private placement safe harbor set forth in Rule 506(c) of Regulation D under the Securities Act of 1933.~~I.   Overview~~The letter makes Rule 506(c) a more attractive option for private fund sponsors by eliminating the need to obtain intrusive documentation from investors who meet minimum investment thresholds and give certain representations, although broadly marketing a private fund continues to present certain challenges that the letter does not address.~~II.   Rule 506(c)~~Generally speaking, offerings of securities must be registered with the SEC and/or relevant states unless an exemption is available.  Rule 506(c), adopted in 2013, provides one such exemption from registration that, unlike the more commonly used Rule 506(b) safe harbor, permits sponsors to offer fund interests using general advertising and solicitation so long as they “take reasonable steps to verify that purchasers of securities sold in any offering…are accredited investors.”  Compliance with this requirement has been daunting, because the accredited investor verification methods prescribed to date have required sponsors to obtain and review extensive personal financial information from many investors prior to sale, or a written confirmation from certain third-party professionals that the investor is accredited.~~III.   The Letter~~The no-action letter seeks to address this problem by confirming that, so long as the following conditions are met, a sponsor will be deemed to have taken reasonable steps to verify that a prospective investor is an accredited investor for purposes of Rule 506(c):~~IV.   Analysis & Key Takeaways~~While the no-action letter provides much-needed clarity with respect to complying with the Rule 506(c) accredited investor verification requirement, there are a number of considerations that sponsors should keep in mind when deciding whether to utilize general advertising and solicitation for a fundraise:~~[1] For an entity that is an accredited investor solely on the basis that its beneficial owners are accredited investors, the minimum investment amount is at least $1,000,000, or $200,000 for each beneficial owner if owned by fewer than five natural persons (and written representations described above should be obtained for each natural person beneficial owner).~~The following Gibson Dunn lawyers prepared this update: Kevin Bettsteller and Zane Clark.~~Gibson Dunn’s lawyers are available to assist with any questions you may have regarding the issues and considerations discussed above. Please contact the Gibson Dunn lawyer with whom you usually work in the firm’s Investment Funds practice group, or the authors:~~Investment Funds Contacts: Kevin Bettsteller – Century City (+1 310.552.8566, kbettsteller@gibsondunn.com) Albert S. Cho – Hong Kong (+852 2214 3811, acho@gibsondunn.com) Candice S. Choh – Los Angeles (+1 310.552.8658, cchoh@gibsondunn.com) Shannon Errico – New York (+1 212.351.2448, serrico@gibsondunn.com) John Fadely – Singapore (+65 6507 3688, jfadely@gibsondunn.com) A.J. Frey – Washington, D.C./New York (+1 202.887.3793, afrey@gibsondunn.com) Shukie Grossman – New York (+1 212.351.2369, sgrossman@gibsondunn.com) James M. Hays – Houston (+1 346.718.6642, jhays@gibsondunn.com) Kira Idoko – New York (+1 212.351.3951, kidoko@gibsondunn.com) Gregory Merz – Washington, D.C. (+1 202.887.3637, gmerz@gibsondunn.com) Eve Mrozek – New York (+1 212.351.4053, emrozek@gibsondunn.com) Roger D. Singer – New York (+1 212.351.3888, rsinger@gibsondunn.com) Edward D. Sopher – New York (+1 212.351.3918, esopher@gibsondunn.com) C. William Thomas, Jr. – Washington, D.C. (+1 202.887.3735, wthomas@gibsondunn.com) Kate Timmerman – New York (+1 212.351.2628, ktimmerman@gibsondunn.com) Zane Clark – Washington, D.C. (+1 202.955.8228, zclark@gibsondunn.com)~~© 2025 Gibson, Dunn & Crutcher LLP.  All rights reserved.  For contact and other information, please visit us at www.gibsondunn.com.~~Attorney Advertising: These materials were prepared for general informational purposes only based on information available at the time of publication and are not intended as, do not constitute, and should not be relied upon as, legal advice or a legal opinion on any specific facts or circumstances. Gibson Dunn (and its affiliates, attorneys, and employees) shall not have any liability in connection with any use of these materials.  The sharing of these materials does not establish an attorney-client relationship with the recipient and should not be relied upon as an alternative for advice from qualified counsel.  Please note that facts and circumstances may vary, and prior results do not guarantee a similar outcome.~~Download PDF~~