What is general solicitation?

Rule 502(c) of Regulation D says the issuer, and anyone acting for it, may not offer or sell securities through general solicitation or general advertising. The rule's own examples are ads, articles and notices in newspapers, magazines or broadcast media, and seminars or meetings whose attendees were invited by general solicitation. Today the same thinking reaches websites, social posts, podcasts, public webinars, paid ads and mass emails to people you do not know.

The ban is a condition of Rule 506(b). Rule 506(c) lifts it, provided every purchaser is accredited and the issuer takes reasonable steps to verify that. Regulation A and Regulation Crowdfunding also allow public communication, each within its own rules.

A communication is an offer when it promotes a securities offering or conditions the market for one. Naming a specific deal, a fund, its terms or its expected results, or inviting someone to invest, all point toward an offer.

SEC staff have said that factual information about a business, its products and services, without offering terms or promotion of the securities, is generally not an offer. Information about how earlier offerings performed can be, depending on context. A "sample deal" that stands in for a live one works like a pitch and is treated like one.

Timing matters as much as wording. A sudden run of educational posts as a raise opens can condition the market even if none of them names the deal.

A communication is general when it reaches people the issuer has no substantive relationship with, meaning one that began before the offering and in which the issuer, or someone acting for it, learned about the person's finances and sophistication.

Several things that feel private do not settle this question. A private link sent to a stranger is still a communication with a stranger. Membership in a group, a paid community or a mastermind is not a relationship with you. A person referred by an existing investor usually arrives with no relationship with you of their own. And because the rule covers anyone acting for the issuer, a co-sponsor or partner who posts about your offering in public can create the problem for you.

Education about the asset class, markets or your firm sits in a fact-specific category. Whether a given piece is an offer depends on what it says, when it appears, who pays for it to reach whom, and whether it previews or feeds a specific offering.

A few facts tend to move content toward an offer: it names a current deal, its size or its expected results; it appears in a burst timed to a raise; or it invites contact about a specific opportunity.

A line such as "this is not an offer" or "for educational purposes only" helps frame a communication, but it does not change what the communication is.

Meet people and start relationships. Do not discuss your specific offering with anyone you do not already have a substantive relationship with, unless you are raising under 506(c).

That holds even in a private, one-on-one conversation at an event. A pitch to someone you have just met is still an offer to a person you have no relationship with. Presenting a live deal from a stage is the same problem, on a larger scale.

Rule 148 carves out certain demo days, but its conditions are narrow: the sponsor must be a specific kind of organisation, such as a university, a government body, a nonprofit, or an angel group, incubator or accelerator, and what the issuer may say is limited. A typical for-profit real estate conference, meetup or mastermind does not qualify.

If you think a communication about a 506(b) offering reached people you have no relationship with, stop and talk to your securities attorney before accepting any more money. Keep the content and its records rather than deleting them. What happens next turns on the facts: who saw it, who invested, and whether anyone came in through it.

The issuer decides which exemption applies, with its securities attorney. This article is education, not legal advice. Whether a particular post, event or conversation is general solicitation depends on facts that only you and your own securities attorney can weigh, so take specific cases to them before you act. The rule is Rule 502(c), https://www.law.cornell.edu/cfr/text/17/230.502, and SEC staff interpretations are in the Securities Act Rules Compliance and Disclosure Interpretations, https://www.sec.gov/rules-regulations/staff-guidance/compliance-disclosure-interpretations/securities-act-rules.