Vent: reg D 506(b) compliance question is ruining my life

I'm dealing with a situation and need some guidance.

Reg D 506(b) compliance question. I've been dealing with this for about 4 weeks now and the situation isn't improving.

I have already done some research online but got conflicting advice.

Do I have a strong case? What should my next steps be?

I work in this industry and unfortunately this is very common. The good news is that when people actually push back with legal representation, companies usually settle.

Just want to point out — the statute of limitations might be a factor here. In some states it's as short as 1-2 years. Don't sit on this too long ngl.

Fwiw been there. Here's what I learned.

A lot of people mess up by is filing with the appropriate government agency. I'd recommend gathering evidence first instead.

Securities attorney here -- I see a lot of confusion about Reg D 506(b) vs 506(c) in these threads, so let me lay out the practical differences that matter for founders.

506(b) -- the "quiet" offering:

• You CANNOT do general solicitation or advertising. This means no posting on social media, no public pitch events, no AngelList syndicate listings that are publicly visible.
• You can raise from an unlimited number of accredited investors PLUS up to 35 non-accredited "sophisticated" investors
• You must have a pre-existing, substantive relationship with every investor BEFORE offering securities
• Non-accredited investors must receive detailed disclosure documents similar to what you would file in a registered offering

506(c) -- the "advertise freely" offering:

• You CAN do general solicitation -- post on LinkedIn, run ads, pitch at public demo days
• BUT every single investor must be verified as accredited through reasonable steps (tax returns, bank statements, CPA letter, or a third-party verification service like Verify Investor or Parallel Markets)
• No non-accredited investors allowed, period

The biggest compliance trap I see with 506(b): founders who attend a public startup event, pitch their company, and then accept investment from someone they met at the event. That is general solicitation followed by a sale, which violates 506(b). You either need to have the relationship before the pitch, or switch to 506(c) and verify accreditation.

For most early-stage founders raising from friends, family, and angel investors they already know, 506(b) is simpler and cheaper. If you want to cast a wider net and do not mind the verification costs (usually 50-200 dollars per investor through a third-party service), 506(c) gives you more flexibility. Either way, file a Form D with the SEC within 15 days of the first sale of securities.