What is the difference between 506(b) and 506(c)?

Under 506(b), GPs can raise capital from accredited investors and up to 35 non-accredited investors, and they aren’t required to independently verify that their LPs are accredited. But they can’t advertise the fund. Under 506(c), GPs must raise capital solely from accredited investors. They’re also responsible for certifying that their investors are accredited—but they are allowed to advertise the fund.

Which is more common: 506(b) or 506(c)?

506(b) exemptions are much more common. From July 2020 to June 2021, 506(b) offerings raised around $1.9 trillion while 506(c) offerings brought in $124 billion during that same timeframe.

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Category: Policy

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