Blue Sky laws and state filings

Rule 506: notice filings

Since 1996, securities sold under Rule 506 have been “covered securities.” States can’t require them to be registered or reviewed, but they can require:

• a notice filing, which is essentially a copy of your Form D;
• a filing fee; and
• consent to service of process.

States keep their authority to pursue fraud, and they regulate the brokers and agents who sell securities in their state.

Deadlines

Most states want the notice within 15 days after the first sale to a resident of that state. Late filings often carry late fees, and repeated failures can draw regulator attention. Track each state separately, since your first sale in each state starts that state’s clock.

Filing through NASAA’s EFD

The North American Securities Administrators Association runs the Electronic Filing Depository, where you can submit Rule 506 notices and pay fees for nearly every state, the District of Columbia, Puerto Rico and the U.S. Virgin Islands in one place. EFD pulls your Form D data from EDGAR, so file Form D first. New York began accepting filings through EFD in 2020. Every PPM Kit includes these state filings: we file the notice with each state where you sell.

Fees

Each state sets its own fee. Some charge a flat amount; others scale with the offering size or the amount sold in the state. Fees range from nothing to more than $1,000 per state. They are paid to the states and aren’t part of PPM Kit’s prices.

Rule 504: registration or a state exemption

Rule 504 securities aren’t covered securities, so each state where you sell can require full registration or its own exemption. Many states offer simplified registration for small offerings, such as the Small Company Offering Registration form, and many have limited offering or accredited investor exemptions. Check every state where you’ll sell before choosing Rule 504.

State legends

Several states expect specific language in offering documents. Every PPM Kit template includes notices for all 50 states and the District of Columbia. For investors outside the United States, use a Regulation S template, which has no state filings, and ask local counsel about the rules in each investor’s country.

Finding your state regulator

NASAA lists every state securities regulator on its website. See our resources page for links.