Under Regulation D Rule 506, which statement is true for 506(b)?

• A. No advertisement but up to 35 non-accredited investors
• B. Advertising is allowed
• C. No accredited investors allowed
• D. Only public offerings allowed

Answer: (A)

Under Regulation D, Rule 506(b) allows a private placement to raise money without general solicitation or advertising. In this setup, the issuer can sell to an unlimited number of accredited investors and up to 99 non-accredited investors, provided there is a pre-existing relationship with those non-accredited investors and they meet sophistication or financial criteria. The key contrast is with Rule 506(c), which permits advertising but requires all purchasers to be accredited. So the true statement is that no advertising is allowed and the cap on non-accredited investors is 99 (not 35).