This checklist helps private lenders stay compliant with federal securities laws when raising capital, forming funds, or offering investment opportunities.
Note: This is a general checklist. Always consult qualified legal counsel before conducting any securities offering.
Step 1: Determine Whether You Are Offering a “Security”
☐ Are you raising money from investors (e.g., friends, family, passive partners)?
☐ Are you pooling capital from multiple individuals or entities?
☐ Are you offering promissory notes, fund units, or fractional interests in loans?
☐ Are investors expecting passive returns from your efforts?
If yes to any, you’re likely offering a security and SEC rules apply.
Step 2: Choose a Securities Offering Exemption
Most private lenders rely on Regulation D of the Securities Act of 1933:
Rule 506(b)
☐ No general solicitation (no ads, public marketing, email blasts, etc.)
☐ Accredited investors only (or up to 35 sophisticated non-accredited investors)
☐ Must deliver full disclosures and PPM
☐ File Form D within 15 days of first sale
Rule 506(c)
☐ General solicitation allowed (ads, social media, email marketing)
☐ All investors must be accredited
☐ Must take reasonable steps to verify accreditation (tax returns, CPA letter, etc.)
☐ File Form D with SEC
Step 3: Prepare Required Offering Documents
☐ Private Placement Memorandum (PPM) – outlines the offering, risks, structure, and use of funds
☐ Subscription Agreement – confirms investor qualifications and commitments
☐ Operating Agreement or LP Agreement – governs the fund’s internal operations
☐ Investor Questionnaire – gathers suitability and accreditation data
These documents protect both you and your investors from misunderstandings and legal exposure.
Step 4: File State Blue Sky Notices
☐ File Form D and required notice filings in each state where investors reside
☐ Pay state filing fees (typically $100–$1,200 per state)
☐ Track renewal or amendment deadlines (varies by state)
☐ Confirm state-specific rules (e.g., NY’s Martin Act, CA Commissioner’s Regs)
Step 5: Determine If You Must Register as an Investment Adviser
☐ Are you managing investor funds and selecting lending investments?
☐ Do you charge performance or management fees?
☐ Is your fund over $25M in assets under management (AUM)?
If yes, you may need to register or file an exemption under the Investment Advisers Act (federal or state level):
☐ Private Fund Adviser Exemption (SEC) – <$150M AUM
☐ State Exemptions – varies; some states require registration regardless of AUM
Step 6: Follow Ongoing Compliance Obligations
☐ Maintain accurate investor records and subscription agreements
☐ Update Form D if offering terms change
☐ Reconfirm accreditation for new 506(c) investors
☐ Provide regular investor reports or financial statements
☐ Maintain internal compliance procedures (AML, disclosures, conflicts of interest)
Step 7: Avoid Common SEC Compliance Pitfalls
- Offering to the public without a valid exemption
- Accepting non-accredited investors under Rule 506(c)
- Failing to verify investor status
- Using outdated or incomplete offering documents
- Ignoring state Blue Sky requirements
- Co-mingling investor funds with personal or operational accounts
Bonus: Annual SEC & State Compliance Maintenance
☐ Review offering exemption validity
☐ Refile or amend Form D as needed
☐ Update state Blue Sky renewals
☐ Evaluate if Investment Adviser registration thresholds have been crossed
☐ Conduct annual internal compliance audit
Need Help?
Geraci LLP can help with:
- Offering structuring and exemption strategy
- PPM and offering document drafting
- SEC and Blue Sky filings
- Investment adviser analysis
- Fund compliance audits and investor relations
