When Congress passed the Jumpstart Our Business Startups (JOBS) Act in 2012 and the Securities and Exchange Commission (SEC) finalized Rule 506(c) of Regulation D in 2013, it fundamentally changed how private fund sponsors could market their offerings. For the first time in modern securities history, issuers were legally permitted to advertise their private placements publicly — a practice that had been banned for nearly 80 years under the Securities Act of 1933. The result was a new era of capital formation, but one governed by rules that many sponsors still misunderstand, misapply, or ignore at their peril.

Rule 506(c) under Regulation D grants issuers the right to engage in general solicitation — meaning they can advertise their offerings to the public through websites, social media, emails, webinars, podcasts, and paid advertising — provided that all actual investors are verified accredited investors. But with that privilege comes a compliance framework that is nuanced, actively enforced, and evolving. The SEC has issued guidance, no-action letters, and enforcement actions that together define the boundaries of what is permissible and what crosses the line.

This article is a comprehensive, practical guide for 506(c) sponsors — including real estate syndications, private equity funds, venture capital funds, hedge funds, and other alternative investment vehicles — on exactly what they can and cannot say and do when soliciting accredited investors under the new general solicitation rules. We cover permissible marketing language, prohibited claims, performance advertising compliance, digital marketing boundaries, and lessons learned from SEC enforcement actions.

What Is General Solicitation Under Rule 506(c)?

General solicitation, in the context of securities law, refers to any broadly disseminated communication that advertises the availability of a securities offering to an undefined group of potential investors. Prior to the JOBS Act, general solicitation was strictly prohibited under Rule 502(c) of Regulation D, meaning private placements could only be marketed through pre-existing substantive relationships.

Rule 506(c), adopted by the SEC in July 2013 and effective September 23, 2013, created a new exemption that expressly permits general solicitation for private offerings, subject to two core conditions:

1. All purchasers must be accredited investors at the time of sale.
2. The issuer must take reasonable steps to verify accredited investor status — self-certification alone is not sufficient.

This means a 506(c) issuer can post on social media, run paid ads, publish press releases, speak at public conferences, maintain a public-facing website describing the offering, and send cold emails — all without violating the general solicitation prohibition. However, every marketing action must still comply with the anti-fraud provisions of the federal securities laws, including Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5.

How the SEC Defines "General Solicitation"

The SEC has consistently interpreted general solicitation broadly. According to SEC Release No. 33-9415, examples of general solicitation include:

• Advertisements published in newspapers, magazines, or broadcast media
• Public websites describing the offering or its terms
• Social media posts available to the general public
• Email blasts sent to persons with whom the issuer has no pre-existing substantive relationship
• Seminars or meetings where attendees were invited through general advertising

Importantly, once a 506(c) issuer engages in any of the above activities, the offering is classified as a 506(c) offering — not a 506(b) — and the verification requirement applies to all investors in that offering.

What You CAN Do: Permissible General Solicitation Activities

The following marketing and advertising activities are generally permissible under Rule 506(c), provided that all content is accurate, non-misleading, and compliant with anti-fraud rules:

1. Public Websites and Landing Pages

Issuers may maintain publicly accessible websites that describe their offerings, investment strategy, management team, and deal terms. This includes deal summary pages, fund overview documents, and investor inquiry forms. The key compliance requirement is that all representations made must be materially accurate and not omit material facts that would make the statements misleading.

According to SEC guidance in Release No. 33-9415, there is no restriction on the type of information that can be included on a public-facing offering website, so long as it is truthful and does not constitute a prospectus under the Securities Act.

2. Social Media Marketing

506(c) sponsors may use Facebook, Instagram, LinkedIn, X (formerly Twitter), YouTube, and other social media platforms to promote their offerings. This includes organic posts, paid advertising campaigns, sponsored content, and influencer partnerships. Each post must be accurate, include appropriate disclosures, and not make any guarantees of returns or misleading performance claims.

3. Email Marketing and Cold Outreach

Unlike 506(b), where issuers must have a substantive pre-existing relationship before discussing an offering, 506(c) issuers can send cold emails to prospective investors they have never met. This is one of the most powerful practical advantages of 506(c). Email campaigns must comply with the CAN-SPAM Act, including opt-out mechanisms and accurate sender identification, in addition to securities law requirements.

4. Podcasts, Webinars, and Public Events

Issuers may appear on podcasts, host public webinars, speak at industry conferences, and conduct online information sessions that are open to the general public. When discussing an offering in these settings, all statements must be accurate, and issuers should avoid making specific return projections unless they can be substantiated and are accompanied by appropriate risk disclosures.

5. Press Releases and Media Coverage

506(c) issuers may issue press releases announcing fund launches, capital raises, and deal closings, provided that such communications are accurate and do not omit material information. Third-party media coverage of an offering is also generally permissible, as the issuer is not responsible for independently published editorial content — though they should be careful about providing materials that could be reproduced inaccurately.

6. Investor Pitch Decks and Offering Materials

Issuers may share pitch decks, private placement memoranda (PPMs), executive summaries, and deal teasers with unverified prospects during the solicitation phase. However, before accepting any investment, all investors must complete the verification process. Sharing these materials does not itself require prior verification; only investment commitment triggers the verification requirement.

What You CANNOT Do: Prohibited Claims and Compliance Violations

While Rule 506(c) expanded permissible marketing dramatically, a significant number of restrictions remain in place under the anti-fraud provisions of federal securities law. The following are categories of conduct that are explicitly or effectively prohibited:

1. Guaranteed Returns and Return Promises

The most common — and most dangerous — compliance violation in 506(c) marketing is promising, projecting, or implying guaranteed investment returns. Under Rule 156 of the Securities Act and the SEC's anti-fraud framework, any statement that implies a specific, assured financial outcome is prohibited unless it is (a) based on reasonable assumptions, (b) accompanied by a balanced presentation of risks, and (c) clearly labeled as a forward-looking projection rather than a guarantee.

Examples of prohibited language include:

• "This investment will return 15% annually."
• "Investors are guaranteed to receive quarterly distributions."
• "You will make your money back within 3 years."
• "Zero risk of capital loss in our structure."

Even qualified projections such as "we target 12–15% returns" must be accompanied by clear disclosures that projections are not guaranteed, past performance does not guarantee future results, and investors could lose their entire investment.

2. Misleading Performance Track Records

Presenting historical performance data is permissible, but it becomes fraudulent when it is cherry-picked, selectively presented, or lacks proper context. The SEC's 2022 Marketing Rule (Rule 206(4)-1) — which applies to registered investment advisers — provides a useful benchmark for best practices, even for exempt issuers. Under these standards:

• Performance shown must reflect actual results, not hypothetical scenarios presented as historical
• Net returns (after fees) must be shown alongside gross returns
• Time periods selected must not be cherry-picked to show only favorable windows
• Benchmark comparisons must use comparable, relevant benchmarks

While the Marketing Rule technically applies to registered investment advisers, the SEC has applied its underlying anti-fraud principles broadly to 506(c) issuers through enforcement actions.

3. Omissions of Material Facts

Under Section 17(a) of the Securities Act and Rule 10b-5, it is unlawful to omit material facts in connection with the offer or sale of securities if those omissions make other statements misleading. In the context of 506(c) marketing, this means:

• Failing to disclose material conflicts of interest (e.g., the sponsor receiving fees from the deal)
• Omitting prior fund failures or underperformance when presenting a track record
• Not disclosing known material risks specific to the investment
• Failing to disclose pending or threatened litigation against the sponsor

4. Accepting Non-Accredited Investors After General Solicitation

Once a 506(c) general solicitation has occurred, the issuer cannot accept investments from non-accredited investors — even sophisticated ones — in that offering. This is an absolute prohibition. Accepting even a single non-accredited investor in a 506(c) offering destroys the exemption and potentially subjects the issuer to securities registration requirements and civil liability.

5. Using Unverified Self-Certification in Place of Third-Party Verification

Under Rule 506(c), a simple investor checkbox stating "I am an accredited investor" does not satisfy the verification requirement. The SEC's guidance on verification requires that issuers take reasonable steps to independently verify accredited status, which typically includes reviewing tax returns, W-2s, brokerage statements, or obtaining written confirmation from a licensed attorney, CPA, broker-dealer, or registered investment adviser.

Performance Advertising Rules for 506(c) Sponsors

Advertising past or projected performance is one of the most legally sensitive areas of 506(c) marketing. The SEC has articulated expectations through a combination of formal rules, interpretive guidance, and enforcement actions.

The "Materially Misleading" Standard

The controlling legal standard for performance advertising is whether the presentation, taken as a whole, would be materially misleading to a reasonable investor. This is not a bright-line test — it requires a facts-and-circumstances analysis. However, the SEC has provided enough guidance through enforcement actions to identify clear patterns of non-compliance.

Past Performance: Required Disclosures

When advertising past performance of prior deals or funds, 506(c) sponsors should include the following disclosures as a compliance baseline:

• "Past performance is not indicative of future results."
• Net return figures (after management fees, carried interest, and other expenses)
• The time period covered by the performance data
• The number of investments included in the performance track record
• A notation if any investments were excluded and why

Projected Returns: Forward-Looking Statements

Projected returns — target IRRs, equity multiples, cash-on-cash returns — are frequently used in real estate syndication and fund marketing. These are not automatically prohibited, but they require:

• A clear statement that projections are forward-looking estimates, not guarantees
• Disclosure of the material assumptions underlying the projections (e.g., exit cap rate, rent growth rate, leverage assumptions)
• A balanced presentation of downside scenarios
• The statement: "Investors may lose some or all of their invested capital."

Testimonials and Endorsements

Testimonials from past investors are a powerful marketing tool but carry significant compliance risk. Under the SEC's Marketing Rule framework and the anti-fraud provisions, testimonials must:

• Accurately reflect the experience of the investor providing the testimonial
• Not be presented as representative of all investors' experiences if they are not
• Disclose if the testimonial provider has any financial relationship with the issuer (e.g., received compensation or a fee waiver)
• Include a disclaimer that the experience described is not typical of all investors

Digital Marketing Compliance: Social Media, Ads, and Online Content

Digital marketing presents unique compliance challenges for 506(c) sponsors because content is often brief, fast-moving, and publicly accessible. The SEC has made clear that the medium does not change the legal standard — all statements in social media posts, paid ads, email campaigns, and online content are subject to the same anti-fraud framework as printed offering materials.

Social Media Posts

Key compliance principles for social media marketing include:

• Accuracy: All factual claims must be supportable. Do not exaggerate deal size, returns, or investor demand.
• Context: Standalone posts that quote a return figure without any risk disclosure can be misleading even if the return is technically accurate. Context matters.
• Record Keeping: The SEC requires issuers to maintain records of all general solicitation materials under Rule 502. This includes screenshots or archives of social media posts.
• No "Teaser" Fraud: Using misleading headlines or click-bait language to attract investor interest — such as "This deal is returning 30% with no risk" — is prohibited even if the full post contains corrections or qualifications.

Paid Advertising Platforms

Paid advertising on platforms like Facebook, Instagram, Google, and LinkedIn is permissible under Rule 506(c), but each platform also has its own advertising policies that govern financial services and investment products. Sponsors should be aware that:

• Facebook and Instagram require prior authorization for financial services advertisers in many jurisdictions
• Google Ads has category-specific policies for financial products that may restrict certain claims
• Ad copy must comply with both the platform's policies and federal securities law simultaneously

Ad copy that is compliant with a platform's policies is not automatically compliant with the SEC's anti-fraud standards — the two frameworks operate independently.

Email Marketing Compliance

Email campaigns to prospective accredited investors must comply with:

• The CAN-SPAM Act — requiring accurate subject lines, a physical mailing address, and a working unsubscribe mechanism
• SEC anti-fraud standards — all representations must be accurate and not misleading
• Record retention requirements — all email campaigns constitute solicitation materials and must be archived

Websites and Online Investor Portals

Public-facing websites may describe the offering, sponsor background, and investment thesis without restriction. However, sponsors should be careful to:

• Not include full Private Placement Memorandums (PPMs) on publicly accessible pages without requiring an accreditation acknowledgment gate
• Ensure all content is current and updated when material facts change
• Include a general disclaimer that the site does not constitute an offer to sell or solicitation of an offer to buy in jurisdictions where such activities are not permitted

506(b) vs. 506(c): Key Marketing Differences at a Glance

Understanding the distinction between Rule 506(b) and Rule 506(c) is essential before launching any marketing campaign. The following table summarizes the key marketing-related differences:

Source: SEC.gov — Regulation D Exemptions Overview

SEC Enforcement: Real Consequences for Non-Compliance

The SEC has been active in bringing enforcement actions against 506(c) issuers that violate general solicitation rules and anti-fraud provisions. Understanding these cases provides practical guidance on where the boundaries are.

Key Enforcement Themes in 506(c) Cases

A review of SEC Litigation Releases from 2018–2025 reveals recurring themes in enforcement actions against private offering sponsors:

1. Fabricated Track Records: Multiple enforcement actions have targeted sponsors who presented investment returns that were inflated, fabricated, or calculated using methodologies inconsistent with their disclosed approach. In several cases, sponsors claimed positive historical performance while omitting prior funds that had lost investor capital.
2. Return Guarantees: The SEC has consistently brought fraud charges against issuers who promised specific returns, called investments "risk-free," or characterized speculative investments as safe or guaranteed.
3. Failure to Verify Accredited Status: Issuers who relied solely on investor checkbox certifications in 506(c) offerings — without obtaining documentation or third-party verification — have faced charges that the exemption was unavailable, exposing them to registration requirements and civil liability.
4. Undisclosed Conflicts of Interest: Sponsors who failed to disclose that they were receiving undisclosed compensation, had related-party transactions, or were diverting investor funds faced both civil and criminal liability.
5. Misleading Offering Materials: Pitch decks, websites, and email campaigns that described properties, cash flows, or valuations inaccurately have formed the basis of SEC fraud charges even when the inaccuracies were arguably immaterial in isolation.

Penalties and Consequences

SEC enforcement actions for 506(c) marketing violations can result in:

• Civil penalties up to $207,183 per violation (as adjusted for inflation under the 2024 civil monetary penalty adjustments)
• Disgorgement of profits — returning all funds raised, plus interest
• Industry bars — prohibitions from serving as an officer, director, or securities professional
• Criminal referrals to the Department of Justice for willful violations
• Rescission rights for investors — investors who purchased in an invalid offering may have the right to demand their money back

"Issuers relying on Rule 506(c) must understand that the ability to generally solicit does not relieve them of their obligation to provide investors with complete and accurate information. The anti-fraud provisions of the federal securities laws apply with full force to all communications made in connection with a general solicitation." — SEC Office of Small Business Policy FAQ on General Solicitation

Practical Compliance Checklist for 506(c) Marketing Materials

Before publishing any marketing material — whether a social media post, email, landing page, paid ad, or pitch deck — 506(c) sponsors should run through the following compliance checklist:

Content Accuracy

• Are all factual claims about the offering, the property, or the sponsor accurate and supportable?
• Are return projections clearly labeled as estimates or targets, not guarantees?
• Is past performance presented with the required context and disclaimers?
• Are all material risks adequately disclosed in the materials?

Investor Eligibility Disclosures

• Does the material include a statement that the offering is only available to accredited investors?
• Does the material explain that accredited investor status will be independently verified?
• Is the offering properly identified as being conducted under Rule 506(c) of Regulation D?

Legal Disclosures

• Is there a disclaimer that the material does not constitute investment advice?
• Is there a disclaimer that past performance does not guarantee future results?
• Is there a statement that investors may lose some or all of their invested capital?
• Are any forward-looking statements accompanied by risk disclosures and assumption disclosures?

Record Retention

• Has the material been saved/archived for compliance record keeping?
• Has the material been reviewed by legal counsel before publication?
• Is there a dated version log if the material is updated over time?

Form D Filing

• Has a Form D been filed with the SEC within 15 days of the first sale?
• Have required state notice filings been made in all states where investors reside (Blue Sky compliance)?