Rule 504

Does a Rule 504 offering of direct participation program interests need to comply with state securities registration or qualification requirements in each state where units are sold?

1. A.No -- Rule 504, like Rule 506, preempts state securities registration requirements entirely, so no state-level filing is ever required.Wrong. Rule 504 does not receive the federal preemption that Rule 506 receives.
2. B.Yes -- unlike a Rule 506 offering, securities sold under Rule 504 are not "covered securities" under federal law, so the offering remains subject to state-by-state blue-sky registration or qualification requirements.Correct. Rule 504 securities are not covered securities and remain subject to state regulation.
3. C.No, because any offering conducted under Regulation D, including Rule 504, is automatically a covered security exempt from state regulation.Wrong. Only Rule 506 offerings are covered securities; Rule 504 is not automatically exempt.
4. D.Yes, but only in the state where the issuer is headquartered; states where individual purchasers reside have no independent registration requirement.Wrong. States where purchasers reside can independently require registration or qualification, not just the issuer's home state.

Why: Yes -- unlike a Rule 506 offering, securities sold under Rule 504 are not "covered securities" under federal law, so the offering remains subject to state-by-state blue-sky registration or qualification requirements.

How is the ceiling on a Rule 504 offering measured?

1. A.By the aggregate offering price of the current offering alone, with no reference to earlier sales.Wrong. The rule subtracts securities sold in the preceding twelve months and during the offering.
2. B.By the number of purchasers rather than by any dollar figure.Wrong. Rule 504 sets a dollar ceiling; the purchaser ceiling belongs to Rule 506(b).
3. C.By the aggregate offering price, reduced by securities sold in the twelve months before the offering began and during it.Correct. The look-back prevents an issuer serialising raises to defeat the ceiling.
4. D.By the issuer total capitalisation at the time the Form D is filed.Wrong. Capitalisation plays no part in the Rule 504 offering limit.

Why: Rule 504 caps the aggregate offering price at ten million dollars, and the cap is not measured on the current offering alone. The rule subtracts the aggregate offering price of all securities sold within the twelve months before the start of the offering and during it, as well as anything sold in violation of Section 5(a). An issuer that raised money recently therefore has less than the full ceiling available. The look-back exists so that an issuer cannot serialise small offerings into a large one and stay inside a rule meant for limited raises.

Under Regulation D Rule 504, what is the maximum aggregate offering amount an issuer may raise using this specific limited-offering exemption?

1. A.$5,000,000Wrong. This is the older, pre-2021 ceiling; it is no longer the current Rule 504 limit.
2. B.$10,000,000Correct. Rule 504 currently exempts limited offerings not exceeding $10,000,000, as published in the current Series 79 outline.
3. C.$50,000,000Wrong. This figure does not correspond to Rule 504's current ceiling.
4. D.There is no dollar limit under Rule 504Wrong. Rule 504 is specifically a limited-offering exemption with a stated dollar ceiling, not an unlimited exemption.

Why: Rule 504 exempts limited offerings and sales of securities not exceeding $10,000,000, as currently published in the Series 79 outline itself — a figure that reflects the post-2021 increase from the older $5,000,000 ceiling.

Under 17 CFR § 230.504(b)(2), what is the current maximum aggregate offering amount a company may raise in a 12-month period under Rule 504 of Regulation D?

1. A.$10,000,000Correct. 17 CFR § 230.504(b)(2) sets the current ceiling at $10,000,000.
2. B.$5,000,000Wrong. $5,000,000 was the ceiling before a 2021 SEC amendment; it is no longer current.
3. C.$1,000,000Wrong. $1,000,000 is well below the current Rule 504 ceiling.
4. D.There is no maximum; Rule 504, like Rule 506, has no dollar ceiling at all.Wrong. Rule 504 does have a dollar ceiling, unlike Rule 506, which has none.

Why: The current ceiling under 17 CFR § 230.504(b)(2) is $10,000,000.