While the U.S. Securities and Exchange Commission generally requires the registration of securities issued by private companies, it also provides for certain exemptions to this registration process. One exemption is Rule 506 under Regulation D of the Securities Act of 1933, which exempts offerings made to "accredited investors." These persons or entities are defined in Rule 501(a) under Regulation D of the Securities Act as including natural persons with (1) a net worth or joint net worth with the person’s spouse exceeding $1 million, not including the value of the primary residence, and / or (2) an annual income of at least $200,000 in each of the two most recent years, or a joint income with a spouse exceeding $300,000 for those years, along with a reasonable expectation of the same level of income in the current year.
Except for certain instances, this rule generally requires a securities offering to be a "private placement," and that offering can usually only even be made available to accredited investors. For this reason, RealtyShares is a private, password-protected platform for persons who first qualify as satisfying the "accredited investor" criteria.