A due-diligence checklist for Regulation D offerings

Start with the public record. It is the one document you can read without the issuer's cooperation, and the one place where the issuer has made representations to a regulator. The Form D on EDGAR is the anchor of the diligence file, and everything the issuer hands you should reconcile back to it.

• Locate the Form D on EDGAR by issuer name, and confirm the entity matches the one you are actually being asked to invest in.
• Confirm the federal exemption claimed in Item 6 (Rule 504, Rule 506(b), or Rule 506(c)) and note what that choice permits and prohibits.
• Check filing timeliness: the form should have been filed within 15 days of the date of first sale reported in the form itself.
• Pull every version of the Form D, including amendments, and read them in sequence to see how the offering size, amount sold, related persons, and exemption have changed over time.
• Reconcile the Form D against the PPM and any marketing materials. Issuer name, offering size, securities type, exemption, and related persons should all agree across documents.

The offering documents are where the deal is actually defined. Read them as a set rather than in isolation, because the economics described in one document should match the rights and obligations described in another. Inconsistencies between documents often tell you more than anything written in any single one.

• Private placement memorandum or offering memorandum: confirm it exists, is current, and describes the same offering as the Form D.
• Subscription agreement: review the representations you are being asked to make, the conditions to closing, and any arbitration or waiver provisions.
• Operating agreement or limited partnership agreement: understand governance, voting rights, capital calls, distribution waterfall, and amendment provisions.
• Financial statements: determine whether they are audited, reviewed, or unaudited, who prepared them, and how recent they are.
• Use of proceeds: trace where investor capital is actually going, including any amounts paid to officers, directors, or promoters.
• Fee and compensation structure: identify management fees, performance or carried-interest terms, placement or finders' fees, and any layered fees across affiliated entities.
• Risk factors: read them as the issuer's own disclosure of what can go wrong, and treat a thin or boilerplate risk section as a flag rather than reassurance.

Private offerings are bets on the people running them, and the people are also where regulatory history tends to live. Identify everyone with a meaningful role and screen each of them, not just the name at the top of the deck. Rule 506(d) makes this concrete: certain disqualifying events involving covered persons can cost the issuer its exemption, so a bad-actor problem is a character signal and a legal one at the same time.

• Identify all principals and covered persons: executive officers, directors, promoters, managing members, general partners, and significant equity holders.
• Run any individuals or firms with securities licenses through FINRA BrokerCheck and the SEC's IAPD database.
• Search SEC enforcement actions and litigation releases, and check state securities regulator actions for the relevant jurisdictions.
• Check court records and run adverse-media searches for prior fraud, judgments, bankruptcies, or related-business failures.
• Assess the track record honestly: prior entities, prior raises, and what happened to them, distinguishing real operating history from a thin or undisclosed past.
• Map prior entities and affiliates to surface Rule 506(d) bad-actor concerns and any pattern of dissolved or renamed ventures.

Structure determines who controls the assets, who values them, and whether the sponsor's incentives are aligned with yours. This workstream is about the plumbing of the deal: the entities, the service providers, and the terms that govern your money once it is in.

• Entity structure and domicile: understand the legal form, where it is organized, and why the chosen structure was used.
• Related-party transactions: identify any dealings between the issuer and entities affiliated with the sponsor, and assess them on arm's-length terms.
• Custodian, administrator, and auditor: confirm who holds the assets, who keeps the books, and who audits, and whether they are independent, reputable third parties.
• Valuation methodology: understand how assets are valued, how often, and by whom, especially for illiquid or hard-to-price holdings.
• Liquidity and redemption terms: lock-ups, gates, notice periods, and any conditions the sponsor can invoke to suspend redemptions.
• Alignment of sponsor incentives: how the sponsor is compensated, how much of its own capital is invested, and whether fees reward asset gathering or actual performance.

Beyond the merits of the deal, confirm the issuer is running the offering the way the claimed exemption requires. A sound investment wrapped in a defective offering process carries real risk, and compliance gaps are often a window into how carefully the rest of the operation is run.

• Accredited-investor verification: for a Rule 506(c) offering, confirm the issuer takes reasonable steps to verify accredited status rather than relying on self-certification.
• Blue-sky and state notice filings: confirm the issuer has made the state notice filings required where investors are located.
• AML and KYC: understand the issuer's process for identifying investors and screening for anti-money-laundering concerns.
• Conflicts disclosures: confirm that conflicts of interest (related parties, affiliated service providers, multiple funds) are disclosed clearly rather than buried.
• General-solicitation conduct: confirm the issuer's actual marketing behavior is consistent with the exemption claimed in the Form D.

Diligence is not finished when you invest; it is finished when you can no longer be harmed by what you missed. Keep a record of what you reviewed and what you concluded, and treat the investment as a position to be monitored rather than a decision to be filed away.

• Keep a diligence file: save the documents you reviewed, the searches you ran, the dates, and the conclusions you reached, so the record is reconstructable later.
• Re-check on amendments: when the issuer files a new Form D or updates the offering documents, compare against your baseline and note what changed.
• Monitor post-investment: set a recurring check for new enforcement actions, litigation, or filings involving the issuer and its covered persons.
• Track service-provider changes: a change of auditor, administrator, or custodian after you invest is a development worth understanding promptly.
• Document open questions: record anything you could not resolve and revisit it as new information becomes available.