b'process was too arduous and argued that they should be able to offer small group investment opportunities to their close group of family, friends and acquaintances. Thus, Rule 506 was born, with the condition that the only people who could be offered investment opportunities had to be previously known to the issuer, and they had to have some level of financial status or sophistication to be able to protect their own interests.Over time, the SEC developed additional rules issuers could use to prove they didnt advertise, such as establishing a record-keeping system to demonstrate that their relationship with each investor pre-dated the offer and thattheyhadmadeapre-offerinquiryintotheissuersfinancialstatus and/or sophistication to determine their suitability to invest in the thing being offered. The exemption is self-executing, meaning that these internal records would need to be produced by an issuer if they were ever asked by regulators or during discovery (or in an investor lawsuit), to prove how they followed the rules of the exemption.TheJOBSActchangedthenametoRule506(b)andauthorizeda second version of Rule 506, called Rule 506(c), which allows advertising of offeringsthatincludeonlyverifiedaccreditedinvestors.Rule506(c) requirestheissuertotakereasonablestepstoensureallinvestorsare accredited.Thisrulereversednearly40yearsofpriorregulationsthat disallowed advertising of exempt offerings.Many issuers are finding that advertising for investors isnt as beneficial as expected. Only 10% of the population is estimated to be accredited. Their names are being sold by list brokers to issuers, all of whom are hoping to meet and attract new accredited investors to their offerings. Newer issuers 54'