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 "@type": "DefinedTerm",
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 "identifier": "kaal:entity:rule-506c",
 "name": "Rule 506c",
 "termCode": "rule-506c",
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 "author": {
  "@type": "Person",
  "name": "Wulf A. Kaal",
  "identifier": "https://orcid.org/0000-0003-0757-275X"
 },
 "dateModified": "2026-07-29",
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   "value": [
    "2016",
    "2016"
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 "subjectOf": [
  {
   "@type": "Claim",
   "@id": "https://wulfkaal.github.io/claims/2714974-018",
   "identifier": "kaal:claim:2714974-018",
   "text": "New Rule 506(c) creates uncertainty for hedge fund advisers considering general solicitation and general advertising, because the SEC required reasonable steps to verify accreditation without supplying a bright line rule for the content of such solicitation.",
   "abstract": "New Rule 506(c) creates uncertainty for hedge fund advisers considering GSGA.",
   "citation": "Kaal and Oesterle, The History of Hedge Fund Regulation in the United States (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2714974",
   "datePublished": "2016",
   "claim_type": "failure",
   "confidence": "argued",
   "is_failure_mode": true,
   "scope_conditions": [
    "applies to Regulation D offerings under Rule 506(c) after September 23, 2013"
   ],
   "source_pdf_sha256": "7764601d3ed5bb056b58949e8411eff9dfb9855f143719062030c980c5fa801b",
   "status": "current"
  },
  {
   "@type": "Claim",
   "@id": "https://wulfkaal.github.io/claims/2714974-019",
   "identifier": "kaal:claim:2714974-019",
   "text": "Although the JOBS Act rules freed hedge fund managers to advertise, talk to reporters, and speak at conferences from September 23, 2013, very few managers actually engage in these less restrictive communications with potential investors.",
   "abstract": "Yet, very few hedge fund managers are actually engaging in less restrictive communications with potential investors.",
   "citation": "Kaal and Oesterle, The History of Hedge Fund Regulation in the United States (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2714974",
   "datePublished": "2016",
   "claim_type": "empirical",
   "confidence": "asserted",
   "is_failure_mode": true,
   "scope_conditions": [
    "applies to the period after Rule 506(c) took effect"
   ],
   "source_pdf_sha256": "7764601d3ed5bb056b58949e8411eff9dfb9855f143719062030c980c5fa801b",
   "status": "current"
  },
  {
   "@type": "Claim",
   "@id": "https://wulfkaal.github.io/claims/2714974-020",
   "identifier": "kaal:claim:2714974-020",
   "text": "The investor verification requirement defeats the purpose of the Rule 506(c) liberalization: fearing liability for investor misrepresentations of personal wealth, most hedge funds raising money from individuals continue to use old Rule 506 rather than Rule 506(c).",
   "abstract": "Fearing possible liability for investor misrepresentations of their personal wealth, most hedge funds that raise money from individuals continue to use the old Rule 506 rather than Rule 506(c).",
   "citation": "Kaal and Oesterle, The History of Hedge Fund Regulation in the United States (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2714974",
   "datePublished": "2016",
   "claim_type": "failure",
   "confidence": "argued",
   "is_failure_mode": true,
   "scope_conditions": [
    "applies to funds raising capital from individual investors"
   ],
   "source_pdf_sha256": "7764601d3ed5bb056b58949e8411eff9dfb9855f143719062030c980c5fa801b",
   "status": "current"
  },
  {
   "@type": "Claim",
   "@id": "https://wulfkaal.github.io/claims/2714974-021",
   "identifier": "kaal:claim:2714974-021",
   "text": "Until the SEC finalizes verification rules and gives a clear, comprehensive definition of the reasonable steps an issuer must take, issuers cannot determine at the time of sale whether their verification attempts made general solicitation permissible.",
   "abstract": "Without appropriate SEC guidance, issuers will have difficulty ascertaining if their verification attempts at the time of the sale of securities made GSGA permissible.",
   "citation": "Kaal and Oesterle, The History of Hedge Fund Regulation in the United States (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2714974",
   "datePublished": "2016",
   "claim_type": "condition",
   "confidence": "argued",
   "is_failure_mode": true,
   "scope_conditions": [
    "conditional on the absence of finalized SEC verification guidance"
   ],
   "source_pdf_sha256": "7764601d3ed5bb056b58949e8411eff9dfb9855f143719062030c980c5fa801b",
   "status": "current"
  },
  {
   "@type": "Claim",
   "@id": "https://wulfkaal.github.io/claims/2715083-033",
   "identifier": "kaal:claim:2715083-033",
   "text": "The JOBS Act reform underdelivers on its own terms: because investor verification under Rule 506(c) is legally uncertain, hedge fund advisers have better incentives to launch retail alternative funds than to use their new freedom to advertise.",
   "abstract": "Investment advisers to hedge funds have better incentives to set up retail alternative funds that allow them to offer features that are attractive to retail investors rather than to advertise under the uncertain new regime (Rule 506(c))",
   "citation": "Kaal, Confluence of Mutual and Private Funds (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2715083",
   "datePublished": "2016",
   "claim_type": "failure",
   "confidence": "argued",
   "is_failure_mode": true,
   "scope_conditions": [
    "Rule 506(c) offerings after the general solicitation ban was lifted",
    "also driven by path dependencies and peer pressure"
   ],
   "source_pdf_sha256": "b5c92186260d4a8499a14f81ee24ace093b24e7740af3effcd1c526fa4fa221e",
   "status": "current"
  },
  {
   "@type": "Claim",
   "@id": "https://wulfkaal.github.io/claims/2739479-014",
   "identifier": "kaal:claim:2739479-014",
   "text": "Lifting the ban on general solicitation and general advertising was a significant formal change for private funds, but the new advertising opportunities are being taken up only reluctantly, and uncertainty about investor verification rules together with specific restrictions makes advertising by private fund advisers unlikely for the foreseeable future.",
   "abstract": "While lifting the ban on GSGA for private fund advisers represented a signif- icant change for the private fund industry, the new advertising opportunities are only reluctantly being accepted;",
   "citation": "Wulf A. Kaal, The Post Dodd-Frank Act Evolution of the Private Fund Industry Comparative Evidence from 2012 and 2 (2016). SSRN: https://ssrn.com/abstract=2739479",
   "datePublished": "2016",
   "claim_type": "failure",
   "confidence": "evidenced",
   "is_failure_mode": true,
   "scope_conditions": [
    "Rule 506(c) offerings after the September 2013 effective date",
    "private fund and private equity advisers"
   ],
   "source_pdf_sha256": "b2e7b81a16ab01c73478b62e85068f9dadc5cdd18427241e8bc5e8216a967730",
   "status": "current"
  }
 ],
 "description": "6 claims in the published works of Wulf A. Kaal carry the concept tag 'rule-506c'. Derived node: a roster, not an adjudicated definition."
}