Can I Accept an Investor Who is Referred By a Friend in my Regulation D, Rule 506(b) Offering?

You need to determine every investor’s “suitability” to invest before you offer them the investment opportunity, regardless of how they were referred, as that begins the “substantive relationship.” See the article “How do I Create a Substantive Relationship.”

The relationship should be with a member of the issuer, which could be you, or your friend if they are a member of the offering company. However, the reason you have to demonstrate the pre-existing relationship is to prove you didn’t advertise, so if you can demonstrate that you (or your friend) didn’t advertise for the investor and you established the substantive relationship by determining their suitability before making the offer, it should be OK to accept them. 

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At Syndication Attorneys LLC, we are committed to your success – book a consultation with one of our team members today!

About Syndication Attorneys

We are NOT your stereotypical law firm. We don’t believe in simply taking your money, handing you a stack of technical, often-incomprehensible legal documents and then bidding you good luck and good-bye. At Syndication Attorneys PLLC, we are committed to your success – not just with the project at hand, but your continuing success in business and investing. We are your long-term legal team.

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