You Already Posted About Your Deal Publicly: Can You Still Raise Under 506(b)?
On this page
If you already posted a live deal publicly, you may not be able to treat the raise as a Rule 506(b) offering for everyone the post reached. A public post that offers a specific deal is general solicitation, and Rule 506(b) does not allow it. You usually have two paths: run the raise under Rule 506(c), which allows general solicitation if every investor is accredited and verified, or show that each person you sell to under 506(b) was not reached by the post or already had a substantive relationship with you. Deleting the post stops new reach, but it does not undo what happened.
This is a common mistake, and it is fixable more often than people fear. Stop posting about the offering, keep records and talk to a securities attorney of your own choosing before you accept more money.
What did the post do to the offering?
Rule 502(c) bars general solicitation in a Rule 506(b) offering (17 CFR 230.502). A post that names the deal and a way to invest is the standard example. Once it is out, the question is not "was it public?" but "who is buying, and how did each of them come to you?" The more your investors found you through the post, the harder the 506(b) path is.
What are your options?
| Option | What it means | Best fit |
|---|---|---|
| Switch the raise to Rule 506(c) | Every purchaser must be accredited, and you must take reasonable steps to verify | Most investors found you through the post, or you want to keep promoting |
| Stay under 506(b) with a documented reasonable belief | For each purchaser, record that they were not reached by the post or had a substantive relationship with you first | Few people saw the post and most investors are people you already knew |
| Pause and restructure | Stop the raise and begin a new offering later | You have not taken money and can wait |
Rule 152(a)(1) says that for an offering that does not allow general solicitation, the issuer must have a reasonable belief, based on the facts and circumstances, that each purchaser was not solicited through the general solicitation or had a substantive relationship with the issuer before the offering began (17 CFR 230.152). Your records are what make that belief reasonable. See the 506(b) substantive relationship test and integration of offerings under Rule 152.
Can you switch to Rule 506(c)?
Often, yes, as long as every purchaser meets the 506(c) conditions. All purchasers must be accredited, and you must take reasonable steps to verify each one. Anyone who is not accredited cannot buy under 506(c). If you have already taken money from someone who is not accredited, you need advice before you change course. See 506(c) for sponsors with a following for the verification methods, and switching exemptions.
What should you do right away?
- Stop adding to it. No more posts, replies or stories about the offering.
- Save the evidence. Screenshot the post with its date, platform, caption, link and any comments you wrote. Do not simply erase it.
- Take it down or edit it once you have the copy, so it stops reaching new people.
- List who has seen it and who has invested. For each investor, note when and how you first met and what you knew about them.
- Choose the exemption you can support. Then align your documents, your investor checks and your Form D to it. See when to amend Form D.
- Talk to counsel before accepting funds.
What not to do
- Do not pretend the post never happened or claim 506(b) with no reasonable basis.
- Do not ask investors to say they never saw it.
- Do not backdate documents or change a record to hide a post.
- Do not keep promoting under 506(b) and hope nobody notices.
Our take
A post made in good faith is a mistake you can often fix. A cover-up is not. If most of your investors came from public followers, Rule 506(c) is the honest fit, and verification is software work, not a new risk. If most are people you have known for years, a careful record may support 506(b). Either way, decide before the next post.
Trade-offs and who this is not for
- Not a way to undo a post. Removing it ends new reach, not past reach.
- Not for deals that already took money from buyers who are not accredited. Get advice first.
- Not legal advice. Facts decide, and a regulator may see them differently from you.
How DoorRaise fits in
DoorRaise helps sponsors raise equity for apartment buildings with 5+ units from friends and followers who already trust them, under Rule 506(b) or 506(c). We are software, legal document preparation, escrow coordination and verification services. We are not a law firm, broker-dealer, investment adviser, funding portal, bank or escrow agent, and we do not hold investor money: investors wire their money to escrow at Enterprise Bank & Trust, in the deal's name.
A 506(c) raise runs on a deal page that shows who can invest and checks every investor's accreditation, and Form D is prepared to match. Flat fees, never a percentage of the raise (see pricing). Create your free sponsor page.
FAQ
I posted my deal on Instagram. Is my 506(b) raise ruined?
Not necessarily, but you cannot treat it as clean. Decide whether to run under 506(c) or to document a reasonable belief for each purchaser, and talk to a securities attorney.
Does deleting the post fix it?
It stops new reach. It does not cure the past, so keep a record.
Can I move to Rule 506(c) after I already posted?
Often, if every purchaser is accredited and verified.
Do I have to wait 30 days after a public post?
Rule 152's 30-day period is between separate offerings. It does not cure general solicitation of the same offering.
Sources
This article is general information, not legal, tax or investment advice. Talk to a securities attorney about your own facts. DoorRaise is not a law firm, broker-dealer, investment adviser or funding portal.