The Section 4(b) exemption from broker-dealer registration is currently effective even though the SEC has not amended Rule 506 yet. This means that firms can set up platforms now in reliance on Section 4(b). Of course, before Rule 506 is amended, the ban on general solicitation in Rule 506 offerings remains in place. Therefore, sales made on these platforms may not use general solicitation (Question 1).

The Section 4(b) exemption is only available to platforms that offer and sell securities under Rule 506. The Section 4(b) exemption is not available to platforms that offer and sell securities under any other exemptions from registration under the Securities Act (Question 3).

Websites and social media can qualify as a platform or mechanism under the Section 4(b) exemption (Question 4).

An associated person of an issuer of securities can maintain a platform or mechanism for sale of the issuer's securities in reliance on the Section 4(b) exemption (Question 7).

Neither the person relying on the Section 4(b) exemption nor any of its associated persons may receive compensation in connection with the purchase or sale of securities on the platform or mechanism. Compensation in this context means any direct or indirect benefits and is not limited to transaction-based compensation. The only compensation a platform operator may receive is any eventual profits from co-investment in the offered securities, since co-investment is explicitly permitted by Section 4(b)(1)(B) (Question 5). This would appear to exclude platforms operating on a paid subscription-based model from the exemption.

Venture capital funds and their advisers can rely on the Section 4(b) exemption. In light of the ban on platform operators receiving compensation other than co-investment profits, the SEC staff believes it is unlikely that anyone outside the venture capital area will be able to rely on the exemption as a practical matter (Question 6).

A person paid a salary to promote, offer, and sell shares of a complex of privately offered funds (for example, in an internal marketing department or the investor relations department of an affiliated adviser or other entity) cannot rely on the Section 4(b) exemption. Under the exemption, any salary paid to a person for engaging in these activities is compensation to that person in connection with the purchase or sale of securities (Question 8).

The Section 4(b) exemption prevents the Section 15 registration obligation from being triggered by the activities enumerated in Section 4(b). However, persons relying on the exemption may still be required to register as a broker-dealer due to their other activities. In addition, Section 4(b) only provides an exemption from registration as a broker-dealer and compliance with requirements applicable only to registered broker-dealers. Some provisions of the securities laws apply to brokers or dealers regardless of their registration status. These requirements may apply to a person relying on the Section 4(b) exemption (Question 9).

The Section 4(b) exemption does not provide an exemption from state registration requirements that may apply (Question 10).