Risk and compliance

Regulation D and Rule 506

Also called Reg D, Rule 506, Rule 506(b), Rule 506(c).

Regulation D is the Securities Act rule set whose Rule 506 lets an EB-5 issuer sell interests in the new commercial enterprise without registering them with the SEC, on conditions that fix who may buy, whether the deal may be advertised, and what the issuer must tell a purchaser who is not accredited.

What it decides

Under 17 CFR 230.506(b) the issuer may not use general solicitation or advertising, and may sell to no more than 35 purchasers in offerings under that rule in any 90 calendar day period, though 230.501(e)(1)(iv) leaves accredited investors out of that count, so the ceiling bites only on non-accredited buyers. Each of those must be capable of evaluating the investment, alone or with a purchaser representative, and must get the disclosure listed in 230.502(b). Under 230.506(c) the issuer may advertise openly, but every purchaser must be accredited and the issuer must take reasonable steps to verify that rather than accept a tick box. A natural person is accredited on net worth over $1,000,000 excluding the primary residence, or income over $200,000, or $300,000 with a spouse or spousal equivalent, in each of the two most recent years plus a reasonable expectation of the same this year, and certain professional certifications also qualify. Rule 506 securities are covered securities under 15 U.S.C. 77r(b)(4)(F), so a state may require a notice filing but not registration, and keeps its fraud jurisdiction. Regulation S, not Rule 506, is what most EB-5 offerings use for sales abroad.

Governed by 17 CFR 230.506, which is a safe harbor under section 4(a)(2) of the Securities Act, together with the conditions it incorporates: manner of offering at 17 CFR 230.502(c), information for non-accredited purchasers at 230.502(b), the count of purchasers at 230.501(e)(1)(iv), and the accredited investor definition at 230.501(a)(5), (a)(6) and (a)(10). Bad actor disqualification at 230.506(d). State preemption and preserved state fraud authority at 15 U.S.C. 77r(b)(4)(F) and 77r(c)(1). All regulation text read from the eCFR renderer API for title 17 on 5 August 2026; the statute from the govinfo US Code text of 15 U.S.C. 77r.

Related terms

Private placement memorandumA private placement memorandum is the disclosure document an EB-5 issuer gives an investor before subscription, setting out the deal terms, the people behind it, the fees taken out of the money and the ways the money can be lost, and since 2022 a regional center must file it with USCIS along with the rest of its offering documents.
Regulation SRegulation S is the Securities Act rule set that treats offers and sales occurring outside the United States as falling outside the registration requirement of section 5, and it is the exemption most EB-5 offerings rely on when selling to investors abroad. The EB-5 statute expressly preserves it for regional centers.
Form DForm D is the short notice an issuer must file with the SEC within 15 calendar days of the first sale in a Regulation D offering, and it is a public EDGAR record an investor can search to confirm that an EB-5 offering was in fact filed as described. It is a notice, not an approval.
Accredited investorAn accredited investor is a person or entity meeting one of the categories in SEC Rule 501(a), 17 CFR 230.501(a), chiefly a net worth above $1,000,000 excluding the primary residence, or income above $200,000 individually or $300,000 jointly in each of the last two years. It is a securities law status, not an EB-5 eligibility test.
Subscription agreementA subscription agreement is the contract by which an investor buys an interest in the new commercial enterprise, carrying the price, the investor's representations, the closing conditions and, where the offering uses one, the terms on which money leaves escrow.

Checked against primary sources on 10 August 2026. Back to the glossary