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What Are the Risks of Including Non-Accredited Investors in a 506(B) Offering?

The risks are the high cost of preparing extensive disclosure documents and the legal liability if the investors are not truly "sophisticated."
Greeks.Live29.10.25

What Are the Risks of Including Non-Accredited Investors in a 506(B) Offering?

The primary risk is the increased disclosure requirement. If even one non-accredited investor participates, the issuer must provide all investors with disclosure documents similar in detail to those required in a registered public offering.

This can be costly and time-consuming to prepare. Additionally, these non-accredited investors must be "sophisticated," meaning they have the financial knowledge to evaluate the investment's risks.

If this sophistication is challenged later, it could create legal problems for the issuer.

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