In mid-2015, Citizen VC, Inc. (“Citizen VC”), an online venture capital firm offering securities, requested no-action relief from the U.S. Securities and Exchange Commission (the “SEC”). In granting the no-action request, the SEC clarified procedures that can be used to establish a pre-existing, substantive relationship with investors so as to avoid “general solicitation and general advertising”.  The letter is instructive to anyone looking to structure an online private placement in reliance on Rule 506(b) under Regulation D (“Regulation D”) under the U.S. Securities Act of 1933, as amended (the “Securities Act”).

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