Unregistered Securities Offerings

Most private companies raise money without ever registering an offering with the SEC. Founders sell shares to friends and family, LLCs sell units to passive investors, startups issue SAFEs and convertible notes, and oil and gas operators sell working interests to fund new wells. Every one of those transactions is a sale of securities. Each is legal only because it fits within an exemption from registration, and each can be undone by an investor if it does not.

Unregistered offerings are not a niche corner of the capital markets. Companies reported raising roughly $2.1 trillion under Regulation D alone in 2024, across more than 32,000 new Form D filings, according to SEC market statistics. The rules governing those raises have also shifted in the last eighteen months, with new SEC guidance that makes advertised offerings far more practical, a pending expansion of who counts as an accredited investor, and new filing access requirements for Form D.

This guide explains what makes a security “unregistered,” what happens when a company gets it wrong, how to choose among the available exemptions, and the Oklahoma rules that apply to companies raising money in or from this state.

Table of Contents

• What Are Unregistered Securities?
• What Happens If You Sell Unregistered Securities?
• Exemptions: Choosing the Right Path
• Accredited Investors in 2026
• General Solicitation: Rule 506(b) vs. 506(c)
• Who Is Involved, and the Finder Problem
• Key Documents in a Private Offering
• The Offering Process, Start to Finish
• Oklahoma Rules for Private Offerings
• After Closing: Resales and Ongoing Obligations
• Common Mistakes That Jeopardize an Offering
• When You Need Securities Counsel

What Are Unregistered Securities?

Section 5 of the Securities Act of 1933 makes it unlawful to offer or sell a security unless a registration statement is in effect or an exemption applies. Registration is the process public companies go through before an IPO: a detailed disclosure document reviewed by the SEC, audited financial statements, and ongoing public reporting. It is expensive and slow, and for a private company raising a few hundred thousand or a few million dollars, it makes no sense.

An unregistered security, then, is simply a security sold without that registration. The term sounds ominous, and in enforcement actions it usually is, but the overwhelming majority of unregistered securities are sold legally in exempt offerings. The legal question is never whether a private company’s securities are registered. They almost never are. The question is whether the offering fit an exemption.

What Counts as a Security

Owners are often surprised by how broadly the term reaches. Stock is obviously a security. So are:

• LLC membership units sold to members who will not actively manage the business
• Limited partnership interests
• Promissory notes sold to investors to fund the business, as opposed to ordinary commercial loans
• SAFEs and convertible notes used in startup financing
• Oil and gas working interests and program interests sold to investors who rely on the operator
• Profit sharing arrangements and “investment contracts” of almost any form

The last category comes from the Supreme Court’s long standing test for an investment contract: an investment of money in a common enterprise with an expectation of profits from the efforts of others. If your investors are putting in money and counting on you to make it grow, you are almost certainly selling a security, whatever the documents call it. That includes an LLC that admits passive members, which is why our guide to Oklahoma LLC operating agreements treats issuing units to investors as a securities transaction.

What Happens If You Sell Unregistered Securities?

Selling securities without registration or a valid exemption creates liability that lasts well beyond the closing. The consequences come from several directions at once.

Investor Rescission Rights

Under Section 12(a)(1) of the Securities Act, a buyer of securities sold in violation of Section 5 can sue to rescind the purchase and recover what they paid, plus interest, or recover damages if they have already sold. No proof of fraud or even negligence is required. The violation itself is enough. The federal claim generally must be brought within one year of the violation.

Oklahoma provides a parallel remedy. Under the Oklahoma Uniform Securities Act of 2004, a purchaser in an offering that violated the state’s registration requirement can recover the consideration paid, plus interest at the legal rate from the date of purchase, less income received, plus costs and reasonable attorney fees. Liability extends beyond the company to control persons, executive officers, and others who materially aided the violation, unless they show they did not know and could not reasonably have known of the facts. That state claim must also generally be brought within one year.

In practice, rescission rights function like a put option held by every investor. If the business struggles, investors who bought in a defective offering can demand their money back, and the founders and officers who sold to them may be personally on the hook.

Regulatory Enforcement

The SEC and the Oklahoma Department of Securities can both bring enforcement actions for unregistered offerings, seeking injunctions, penalties, disgorgement, and orders barring individuals from future securities activity. Enforcement is most common where the offering also involved misstatements, but registration violations alone are sufficient.

Consequences in Your Next Deal

Even when no investor sues, a defective offering tends to surface later. Venture investors, lenders, and acquirers review prior securities issuances in diligence, and a buyer who finds a rescission exposure will either demand an indemnity, a price reduction, or a cleanup rescission offer before closing. Some violations also create “bad actor” disqualifications that can bar the company or its principals from using Rule 506 in the future. Our guide to due diligence in private M&A covers how buyers review a target’s capitalization history.

Exemptions: Choosing the Right Path

Federal law offers several routes to raise capital without registration. The SEC’s offering pathways overview compares them in detail. The table below summarizes the options most relevant to private companies.

Rule 506(b): The Workhorse

Rule 506(b) is the exemption most private companies use. It permits an unlimited raise from an unlimited number of accredited investors, plus up to 35 nonaccredited investors in any 90 day period who, alone or with a purchaser representative, have enough financial and business experience to evaluate the investment. The trade off is that the company cannot use general solicitation or advertising to find investors. Because Rule 506 securities are “covered securities” under federal law, states cannot require registration, although they can and do require notice filings and fees.

Including even one nonaccredited investor changes the offering significantly. The company must then provide those investors with disclosure comparable to a registered or Regulation A offering, including financial statement information, and must answer their questions. Many companies limit 506(b) offerings to accredited investors specifically to avoid that disclosure burden. The SEC’s Rule 506(b) overview summarizes the conditions.

Rule 506(c): Advertised Offerings

Rule 506(c) allows a company to advertise its offering publicly, through its website, social media, pitch events, or paid advertising, as long as every purchaser is an accredited investor and the company takes reasonable steps to verify that status. For years the verification requirement kept many companies away from 506(c). Guidance issued in 2025 changed that calculus, as discussed in the general solicitation section below.

Section 4(a)(2): The Statutory Private Placement

Section 4(a)(2) exempts “transactions by an issuer not involving any public offering.” It is the statutory foundation that Rule 506 builds on, but it has no bright line rules. Courts look at the number and sophistication of the offerees, their access to information, and the absence of any public solicitation. Because 4(a)(2) offerings are not covered securities, they also need a separate state exemption. Companies typically rely on it for very small, negotiated transactions, such as a single strategic investor, and use Rule 506 for anything broader.

Rule 504, Crowdfunding, and Regulation A

Rule 504 allows raises up to $10 million from any investors, but it does not preempt state law, so the company must register or find an exemption in every state where it sells. Regulation Crowdfunding allows raises up to $5 million from the general public through an SEC registered funding portal, with financial statement requirements that scale with the amount raised and annual reporting afterward. Regulation A works like a streamlined public offering, with an offering statement reviewed by the SEC. These options can fit consumer facing businesses with a customer base that wants to invest, but they are far less common than Regulation D: in 2024, according to the same SEC data, Regulation Crowdfunding offerings raised roughly $179 million and Regulation A offerings roughly $900 million, compared with trillions under Regulation D.

Rule 144A

Rule 144A governs resales of securities to large institutional investors known as qualified institutional buyers. It is used mainly by larger companies issuing debt through investment banks and is rarely relevant to Oklahoma private companies raising growth capital.

Accredited Investors in 2026

Most private offerings turn on whether investors are “accredited.” The definition, found in Rule 501(a) of Regulation D, is meant to identify investors who can fend for themselves without the protections of registration. The SEC’s accredited investor overview lists every category.

Individuals

A natural person is accredited if they meet any of the following:

• Income: more than $200,000 in each of the two most recent years ($300,000 together with a spouse or spousal equivalent), with a reasonable expectation of the same this year
• Net worth: more than $1 million, alone or with a spouse or spousal equivalent, excluding the value of the primary residence
• Professional credentials: holding a Series 7, Series 65, or Series 82 license in good standing
• Insider status: being a director, executive officer, or general partner of the issuer
• Fund relationships: being a “knowledgeable employee” of a private fund, or a family client of a qualifying family office

The income and net worth thresholds have not changed since the 1980s and are not indexed for inflation, which means a far larger share of households qualify today than when the rule was written. The credential categories were added in 2020.

Entities

Entities qualify in several ways, including corporations, LLCs, partnerships, and certain trusts with more than $5 million in assets that were not formed to make the specific investment; any entity owning more than $5 million in investments; banks, registered investment advisers, and similar institutions; and any entity in which every equity owner is accredited. SEC guidance updated in early 2026 confirms that, for that last category, an issuer can look through layers of entity ownership to the individuals at the top.

Sophisticated Nonaccredited Investors

Rule 506(b) permits up to 35 nonaccredited investors in any 90 day period, but each must have the knowledge and experience to evaluate the investment, either alone or with a purchaser representative. As discussed above, including them triggers significant disclosure obligations, including financial statement information. That is why the answer to “Is a private placement memorandum required?” is usually “not legally, if every investor is accredited, but yes if any are not.”

What Is Changing

Expanding the definition is an active priority in Washington. The SEC has scheduled an open meeting for September 30, 2026 to consider notices on designating additional certifications, designations, or credentials that would qualify individuals as accredited investors, and its regulatory agenda lists broader amendments to exempt offering pathways, including the accredited investor definition, as a future proposal. In Congress, the Equal Opportunity for All Investors Act, which would let individuals qualify by passing an exam, passed the House in 2025 but has not become law as of this writing. Until any change takes effect, the current categories control.

General Solicitation: Rule 506(b) vs. 506(c)

What Counts as General Solicitation

General solicitation means offering securities through public communications or to people with whom the company, or someone acting for it, has no preexisting substantive relationship. Posting a raise on social media, pitching at an open event, sending mass emails to purchased lists, advertising in print or online, and describing a specific offering in a press release or on a public website are all general solicitation.

A 506(b) offering cannot include any of that. What it can include is outreach to people the company or its principals already know well enough to evaluate their sophistication and financial circumstances. SEC guidance updated in 2026 emphasizes that such a relationship must be substantive: the issuer must actually have enough information to evaluate the investor, and a relationship cannot be established merely by waiting a set period of time after first contact.

What Is Not General Solicitation

• Conversations with existing investors, business contacts, and personal acquaintances whose finances and experience you know
• Introductions through a registered broker dealer or another intermediary with its own preexisting relationships with investors
• General business communications that do not mention an offering, such as product marketing
• Presentations at qualifying “demo day” events sponsored by universities, angel groups, accelerators, and similar organizations, if the communication stays within the limits of SEC Rule 148, which restricts what can be said about the offering itself

Rule 506(c) and the Verification Requirement

In a 506(c) offering, the company may advertise freely, but it must take reasonable steps to verify that every purchaser is accredited. A checked box on a questionnaire is not enough. The rule lists nonexclusive safe harbor methods: reviewing IRS forms for income, reviewing bank and brokerage statements and a credit report for net worth, or obtaining a written confirmation from a registered broker dealer, SEC registered investment adviser, attorney, or CPA who has verified the investor’s status within the prior three months. Guidance issued in early 2026 confirms that issuers can mix methods within the same offering.

Switching Between 506(b) and 506(c)

Once a company has generally solicited, it generally cannot fall back to 506(b) for investors it found through that solicitation. Guidance issued in 2026 clarifies that a company that previously ran a 506(c) offering can later sell to the same people in a 506(b) offering only if it had a substantive relationship with them before the 506(b) offering began. The practical rule: decide which exemption you are using before anyone says anything publicly about the raise.

Who Is Involved, and the Finder Problem

The Issuer and Its Principals

The company’s founders and officers usually lead the raise. Under both federal and Oklahoma law, officers and employees can generally solicit investors on the company’s behalf without registering as brokers, as long as they are not paid commissions or other compensation tied to the amount raised and selling securities is not their primary role.

Company Counsel and Accountants

Securities counsel selects the exemption, drafts the offering documents, manages investor qualification, and handles federal and state filings. The company’s CPA prepares financial statements, which are required for any nonaccredited investors in a 506(b) offering, for Regulation Crowdfunding and Regulation A, and as a practical matter for most institutional investors.

Placement Agents

A placement agent is a registered broker dealer that introduces the company to investors in exchange for a fee, usually a percentage of the capital raised plus warrants. Larger raises frequently use one. Placement agents bring their own investor relationships, which lets a 506(b) offering reach investors the company does not know without general solicitation.

Finders

A finder is someone who introduces investors to a company for a fee but is not a registered broker dealer. This is one of the most common problems in small company capital raising. Receiving compensation tied to the success or size of a securities sale is a hallmark of broker activity, and an unregistered person who does it may be acting as an unlicensed broker under federal law and Oklahoma law.

Key Documents in a Private Offering

The Private Placement Memorandum

A private placement memorandum (PPM), sometimes called an offering memorandum, describes the company, its business, management, capitalization, the terms of the securities, the use of proceeds, and the risks of the investment. It is legally required when a 506(b) offering includes nonaccredited investors, and strongly advisable in most other offerings.

The reason is antifraud liability. Every securities offering, exempt or not, is subject to Rule 10b-5 and the Oklahoma Act’s antifraud provisions, which prohibit material misstatements and omissions. A PPM with thorough risk factors is the company’s best evidence that investors were told what they needed to know. Offerings without one rely on whatever was said in pitch decks, emails, and conversations, which is a much weaker record.

A strong PPM covers the business and its competitive position, management and their backgrounds, current ownership and the effect of the raise, the terms of the securities and investors’ rights, how the money will be used, financial information, conflicts of interest and related party transactions, and specific, candid risk factors rather than boilerplate.

Subscription Agreement

The subscription agreement is the contract under which each investor buys the securities. It includes the investor’s representations about their accredited status, investment intent, and understanding of the risks and resale restrictions, and it is the document the company relies on to establish its exemption.

Investor Questionnaire and Verification Records

An investor questionnaire documents how each investor qualifies. In a 506(b) offering, it supports the company’s reasonable belief in investor status. In a 506(c) offering, it is paired with the verification documents or representations described above.

The Securities and Governing Documents

Depending on the deal, the securities may be stock issued under the charter, units issued under an LLC operating agreement, SAFEs, convertible notes, or preferred stock with an investor rights agreement. The governing documents need to authorize the issuance and describe the investors’ rights. Y Combinator’s standard SAFE documents are widely used for early stage raises, but they still require an exemption and still need to fit the company’s capitalization. Our guide to seed financing for startups compares SAFEs, convertible notes, and priced rounds.

Bad Actor Questionnaires

Rule 506 is unavailable if the company or certain “covered persons,” including directors, executive officers, 20 percent owners, promoters, and compensated solicitors, have disqualifying events such as certain securities related criminal convictions, court injunctions, or regulatory orders. Each covered person should complete a questionnaire before the offering begins, and the check should be refreshed for later closings.

Form D and State Notices

A company relying on Regulation D must file Form D with the SEC within 15 calendar days after the first sale, which is generally the date the first investor becomes irrevocably committed to invest. There is no SEC fee. The company must then make notice filings in each state where investors reside, covered below for Oklahoma. Form D must be amended annually while an offering continues and to reflect certain material changes.

The Offering Process, Start to Finish

Stage 1: Planning and Structure

Before anyone talks to an investor, the company should decide how much it needs, what it is selling (common or preferred equity, LLC units, SAFEs, convertible notes, or debt), at what valuation or on what terms, and which exemption it will rely on. This is also when the company should clean up its own house: confirm that prior issuances were properly documented and exempt, that the cap table is accurate, and that the entity’s governing documents allow the new securities. Our article on organizational issues when raising capital covers the corporate housekeeping, and our guide to financials and valuation covers the numbers investors will expect.

Stage 2: Documents

Counsel prepares the PPM (if used), subscription agreement, investor questionnaire, and any amendments to the charter or operating agreement, along with the securities themselves. Bad actor questionnaires go out to covered persons at this stage.

Stage 3: Diligence

Even in a small raise, the company should confirm that everything in its offering materials is accurate and supportable. Institutional and lead investors will conduct their own diligence, often requesting financial statements, material contracts, intellectual property records, and litigation history.

Stage 4: Investor Outreach and Subscriptions

Outreach follows the rules of the chosen exemption: no public marketing in 506(b), verification of every purchaser in 506(c). Investors complete questionnaires and subscription documents, and funds are collected, sometimes into escrow until a minimum amount is raised.

Stage 5: Closing and Filings

At closing, the company countersigns the subscription agreements, issues the securities, updates its cap table, and files Form D and state notices within their deadlines. Since September 2025, access to the SEC’s EDGAR filing system requires individual Login.gov credentials with multifactor authentication under the EDGAR Next system. A company filing its first Form D needs to obtain EDGAR access and set up account administrators before the 15 day deadline, which can take longer than people expect.

Oklahoma Rules for Private Offerings

Oklahoma regulates securities offerings through the Oklahoma Uniform Securities Act of 2004, administered by the Oklahoma Department of Securities. Like federal law, the Act requires every security offered or sold in Oklahoma to be registered, exempt, or a federal covered security. It applies to an Oklahoma company selling to investors anywhere, and to an out of state company selling to Oklahoma residents.

Rule 506 Notice Filings

Because Rule 506 securities are federal covered securities, Oklahoma cannot require them to be registered. It does require a notice filing: a copy of the Form D and a $250 fee, filed no later than 15 days after the first sale to an Oklahoma investor. The filing can be made on paper or through NASAA’s Electronic Filing Depository, which charges its own processing fee. Other states have their own notice filing rules and fees, so a raise with investors in several states needs a filing in each.

Oklahoma’s Own Exemptions

For offerings that are not federal covered securities, such as Section 4(a)(2) placements and Rule 504 offerings, the company needs an Oklahoma exemption. The most commonly used are:

• Limited offering exemption. Sales to not more than 25 purchasers in Oklahoma during any 12 consecutive months, without general solicitation or advertising, and without commissions or other compensation paid to anyone other than a registered broker dealer or agent.
• Oklahoma accredited investor exemption. A state exemption for offers and sales made only to accredited investors, which requires a notice filing with the Department.
• Intrastate offering exemption. Oklahoma’s crowdfunding style exemption for companies that reside and do business in Oklahoma and sell only to Oklahoma residents in compliance with the federal intrastate exemption and Rule 147A. Raises are capped at $5 million, each nonaccredited investor is limited to $5,000, the company must file a notice at least ten business days before any sale, and investor funds must be held in escrow at a bank authorized to do business in Oklahoma.

Oklahoma Liability Rules

Oklahoma’s civil liability provisions track the federal framework but reach further in some respects. A purchaser in an offering that violated the state’s registration requirement can recover the purchase price, plus interest at the legal rate, costs, and reasonable attorney fees. Control persons, executive officers, and anyone who materially aided the violation can be jointly and severally liable. The Act’s antifraud provisions apply to every offering, including those that are exempt from registration and federal covered securities.

Oil and Gas Interests

Oklahoma’s definition of a security expressly includes certificates of interest or participation in oil, gas, or mining titles or leases and in payments out of production. Selling working interests or program interests to investors who will rely on the operator is a securities offering, and energy programs have long been a focus of Oklahoma securities enforcement. Operators raising money for drilling programs need the same exemption analysis as any other issuer. Our article on asset backed securities in oil and gas covers another way energy companies access capital.

The Oklahoma Capital Landscape

Oklahoma’s private capital ecosystem has grown in recent years. i2E manages early stage investment funds and connects Oklahoma companies with angel investors. In 2025, the state created the Invest in Oklahoma Board, administered through the State Treasurer’s office, to direct state entity investments into Oklahoma based private equity, venture capital, and growth funds. Angel groups and family offices in Oklahoma City and Tulsa, many with energy industry wealth, remain a major source of accredited capital for local companies. All of them expect the offering to be properly structured, and institutional funds will verify that in diligence.

After Closing: Resales and Ongoing Obligations

Resale Restrictions

Securities sold in a private offering are “restricted securities.” Investors cannot freely resell them unless the resale is registered or exempt. The most common resale exemption, Rule 144, generally requires a holding period of one year for securities of a private, nonreporting company. Private resales to accredited investors can sometimes be made under Section 4(a)(7) or other exemptions. Subscription agreements and governing documents should state the restrictions clearly, and stock certificates or book entries should carry legends. The SEC’s regulatory agenda includes proposed amendments to Rule 144, so the holding rules may change.

Future Raises and Integration

Companies that raise money in stages need to consider whether separate offerings will be “integrated” and treated as one. SEC Rule 152 provides a general principle and several safe harbors, including one for offerings more than 30 days apart. The main risk is using general solicitation in one offering while relying on 506(b) in another. Plan the sequence of raises, not just the current one.

Investor Communications and Reporting

Private companies are not required to file periodic reports with the SEC after a Regulation D offering, but they usually owe investors reports under the operating agreement, investor rights agreement, or subscription documents. Regulation Crowdfunding and Tier 2 Regulation A issuers have ongoing SEC reporting obligations. Any communication with investors about the company’s performance remains subject to the antifraud rules.

The 2,000 Holder Threshold

A company with more than $10 million in assets and a class of equity held of record by 2,000 or more persons, or by 500 or more persons who are not accredited, must register that class with the SEC and begin public reporting. Most private companies never approach that number, but companies that issue equity broadly, particularly to employees or through crowdfunding, should track it. Certain holders, including employees who received securities as compensation, are excluded from the count.

Tax Consequences of the Security You Issue

The form of the security also has tax consequences for investors. C corporation stock may qualify for the qualified small business stock exclusion, which the 2025 federal tax law expanded for stock issued after July 4, 2025. LLC units and S corporation stock do not qualify. Our QSBS guide covers the requirements, and our comparison of LLC, S corporation, and C corporation structures explains why many companies planning to raise outside equity choose a C corporation.

Common Mistakes That Jeopardize an Offering

• Treating a raise as informal because the investors are friends. Every investment needs an exemption and documentation, no matter how well you know the investor.
• Not knowing which exemption you are relying on. The exemption determines who can invest, what you can say publicly, and what you must file. Choosing after the fact rarely works.
• Accidental general solicitation. A LinkedIn post announcing the raise, a pitch at an open event, or a story in the local business press can eliminate the 506(b) exemption.
• Relying on self certification in a 506(c) offering. A checked box is not verification unless the minimum investment approach applies and its conditions are met.
• Paying an unregistered finder. Success fees paid to unregistered intermediaries can taint the offering.
• Missing Form D and state notice filings. Late or missing filings do not by themselves destroy the Rule 506 exemption, but they invite regulatory attention, can create disqualification issues, and show up in diligence.
• Weak disclosure. Exempt offerings are still subject to antifraud rules. Optimistic projections without balanced risk disclosure create liability if the business underperforms.
• Losing the paperwork. The company bears the burden of proving its exemption. Without signed subscription agreements, questionnaires, and verification records, it may not be able to.

When You Need Securities Counsel

Securities counsel is most valuable before the first investor conversation, when the exemption, structure, and documents can still be chosen deliberately. Situations where counsel is essential include any raise that includes nonaccredited investors, any advertised offering, any arrangement to pay someone for introducing investors, raises from investors in multiple states, offerings of oil and gas interests, and any cleanup of prior issuances that may not have been properly exempt. Counsel also matters after closing, in investor reporting, future rounds, and preparing the company’s capitalization records for eventual sale. Our guide to protecting minority owners covers the governance terms investors will often negotiate alongside the securities.

Equity is not the only option. For companies with steady cash flow, SBA guaranteed debt can fund growth without issuing securities at all. Our SBA 7(a) loan guide covers eligibility and the 2026 program changes.

Frequently Asked Questions

• What are unregistered securities?

  Unregistered securities are stocks, LLC units, notes, SAFEs, investment contracts, and other securities sold without an effective registration statement on file with the SEC. Most private company securities are unregistered and are sold legally under an exemption, such as Rule 506 of Regulation D. The problem arises only when no exemption applies.

• Is it illegal to sell unregistered securities?

  It is illegal to offer or sell securities that are neither registered nor exempt. Selling unregistered securities in a properly structured exempt offering is legal and is how most private companies raise money. The company must know which exemption it is relying on and meet its conditions.

• What happens if a company sells unregistered securities without an exemption?

  Investors can sue to rescind their purchase and recover what they paid plus interest, under both federal law and the Oklahoma Uniform Securities Act, which also allows recovery of attorney fees. Control persons and officers can be personally liable. The SEC and the Oklahoma Department of Securities can bring enforcement actions, and the problem will surface in future financings and sale diligence.

• Do I need a private placement memorandum for a Regulation D offering?

  A PPM is legally required in a Rule 506(b) offering that includes nonaccredited investors. If every investor is accredited, no specific disclosure document is required, but a PPM is still strongly advisable because antifraud rules apply to every offering and the PPM is the company’s best evidence of what investors were told.

• How many investors can I have in a Rule 506(b) offering?

  An unlimited number of accredited investors, plus up to 35 nonaccredited investors in any 90 day period who are financially sophisticated. Including any nonaccredited investors triggers disclosure and financial statement requirements. Separately, a company with more than $10 million in assets and 2,000 or more record holders, or 500 nonaccredited holders, must register with the SEC.

• Can I advertise my private offering?

  Only under an exemption that permits it. Rule 506(c) allows public advertising if every purchaser is an accredited investor and the company takes reasonable steps to verify their status. Regulation Crowdfunding and Regulation A also permit public communications under their own rules. Rule 506(b) and the Oklahoma limited offering exemption prohibit general solicitation.

• How do I verify accredited investors under Rule 506(c)?

  By reviewing tax forms for income, reviewing financial statements and a credit report for net worth, obtaining written confirmation from a registered broker dealer, investment adviser, attorney, or CPA, or other reasonable methods. Under 2025 SEC guidance, an offering with minimum investments of at least $200,000 for individuals or $1 million for entities can generally rely on written representations, if the investment is not third party financed and the company has no contrary knowledge.

• Do I have to file anything with Oklahoma for a Rule 506 offering?

  Yes. Oklahoma requires a notice filing consisting of a copy of the Form D and a $250 fee within 15 days after the first sale to an Oklahoma investor. It can be filed through NASAA’s Electronic Filing Depository. States where other investors live have their own notice requirements.

• Can I pay a finder to introduce investors?

  Paying someone a commission or success fee for bringing in investors is generally broker activity requiring registration. No federal finder exemption has been adopted as of 2026. Using an unregistered finder can give investors rescission rights and expose the company to enforcement. Use a registered broker dealer, or have counsel structure any finder arrangement before it begins.

• Are SAFEs and convertible notes securities?

  Yes. SAFEs, convertible notes, and similar instruments sold to investors are securities and must be sold in a registered or exempt offering, typically under Rule 506(b) or 506(c). The fact that they convert into equity later does not change the analysis, and the equity issued on conversion also needs to be accounted for in the company’s securities compliance.

Disclaimer: This article provides general information about federal and Oklahoma securities laws governing private offerings and should not be considered specific legal, tax, or financial advice. Securities regulations, SEC guidance, and state requirements change frequently, and whether a particular offering qualifies for an exemption depends on its specific facts. Consult qualified securities counsel before offering or selling securities.

About Cantrell Law Firm: We are Oklahoma business attorneys who help entrepreneurs and business owners form, finance, grow, and sell companies. As former business owners ourselves, we structure capital raises with a practical view of how founders actually find and work with investors. Contact Cantrell Law Firm to discuss your capital raise.