Regulation D (Reg D) is a regulation promulgated by the Securities and Exchange Commission (SEC) allowing smaller companies to raise capital through the sale of equity or debt securities without having to register their securities with the SEC. By default, offerings and sales of securities must be registered with SEC. Failure to register with the SEC can allow purchasers of securities to rescind transactions and can open up issuers to significant liability. Regulation D contains three rule exemptions from registration. Rule 504 is an exemption for offers and sales up to $1,000,000 in securities in a 12-month period if certain conditions are met, such as ensuring that the purchasers are accredited investors. Rule 505 is an exemption for offers and sales up to $5,000,000 in securities in a 12-month period to accredited investors and up to thirty-five unaccredited investors, provided that, among other requirements, the securities cannot be resold within two years after purchase. Rule 506 is an exemption for nonpublic offers and sales with an unlimited value to investors that are sophisticated accredited investors and thirty-five other purchasers and public offers and sales to accredited investors that for which the investor takes reasonable steps to determine that the investors are accredited investors.