b'Securities exemptions are self-executing, meaning that the issuer must establish a recordkeeping system to be able to prove how it followed the specific rules of the selected exemption.3Each securities exemption (federal or state) has a specific set of rules regarding who is allowed to invest or participate in management. Typical rules for securities exemptions may:Prohibit or restrict advertising for investors. Require the existence of a substantive, pre-existing relationship between the issuer and investors before securities may be offered or sold. Require investors to have certain income, net worth or investment experience. Require the issuer to disclose all material facts investors need to make informed consent. Exclude certain bad actors from becoming officers, directors, managers or promoters of an exempt offering, or from owning more than 20% of any voting class of securities in an offering (Bad Actor Rules). Certain bad actors are prohibited from participating and /or 3 SeeSECpublicationRegulationD,RulesGoverningTheLimitedOfferAndSaleOfSecuritiesWithoutRegistrationUnderTheSecuritiesActof1933.42'