I am under the impression that there are some restrictions on raising money from outside investors for an investment fund. In particular Regulation D of the Securities Act of 1933 provides a few “exemptions,” but these come along with extra requirements such as the one that stipulates you are only allowed to raise money from “accredited investors,” restrictions on advertising, etc.

How often can one change his/her elected exemption? What is the most likely path that one can take if his/her ultimate goal is manage money for lower/middle-class investors with a low to zero management fee and a higher performance fee?

  • My understanding of Reg D is that it’s about the sale of new securities. If you want to manage money for clients using existing securities, your typical options are to be a registered representative or an investment advisor representative working for a broker dealer or Registered Investment Advisor firm.
    – T. M.
    Commented Jun 26, 2019 at 21:18

1 Answer 1


An issuer company with a business purpose of investing, and with more than 100 shareholders, is required to register as an investment company. But also, a company, with a business purpose other than investing, can avoid being classified as an investment company by having a portfolio that is 60% Treasury securities.

The company issuing its own shares under Regulation D is a different issue. Rule 504 allows non-registered stock issue to non-accredited investors but the number of investors is severely limited in most states. Of course new crowd-funding laws have come-along but those are state-by-state also.

There is a multi-state standardized prospectus form that can be used for issue of registered stock.

You must log in to answer this question.

Not the answer you're looking for? Browse other questions tagged .