Reg D Offerings to Non-Accredited Investors - Warning Technical Stuff!!

This one is a bit technical - hey it can't all be light and breezy.

Hedge fund promotors offering private placements to non-accredited investors and hoping to comply with Reg D (the '33 Act registration exemption safe harbor) generally have to furnish certain financial statement information to such investors.

For offerings in excess of $7.5 M it looks like the pertinent financials required are to be found in SEC Reg S-X  Secs. 210.3-18,6-07, and 6-09.

Real enthusiasts are advised to Google on Reg D and Reg S-X to find the pertinent rules.

The "take away" (I hate the term) is that fund promotors relying on Reg D should make sure that they are furnishing their non-accredited investors with the Reg D required financials in addition to non-financial information on the deal.

BTW the latter, i.e the non finanical information, is typically disclosed through use of a PPM (private placement memorandum) generally prepared by a lawyer. The former, i.e. the financials,  is going to require some involvement from your friendly local accountant.

Accredited investor only deals don't have to make these financial disclosures. So, many funds don't accept any non-accredited investors, in part to avoid this extra disclosure baggage.