Capital MarketsQuestion 362 of 398
A startup raises money by selling securities only to a small group of wealthy accredited investors, with no general advertising, relying on Rule 506(b) of Regulation D. This is an example of a:
a.Registered initial public offering
b.Regulation A mini-registration
c.Intrastate offering
d.Private placement exempt from full registration
Explanation
Selling securities to accredited investors without general solicitation under Rule 506(b) of Regulation D is a private placement, which is exempt from full SEC registration under the Securities Act of 1933. Such offerings involve less disclosure but produce restricted securities that cannot be freely resold.
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