(a) A failure to comply with a term, condition or requirement of Sec. 230.504, Sec. 230.505 or Sec. 230.506 will not result in the loss of the exemption from the requirements of section 5 of the Act for any offer or sale to a particular individual or entity, if the person relying on the exemption shows:
(1) The failure to comply did not pertain to a term, condition or requirement directly intended to protect that particular individual or entity; and
(2) The failure to comply was insignificant with respect to the offering as a whole, provided that any failure to comply with paragraph (c) of Sec. 230.502, paragraph (b)(2) of Sec. 230.504, paragraphs (b)(2)(i) and (ii) of Sec. 230.505 and paragraph (b)(2)(i) of Sec. 230.506 shall be deemed to be significant to the offering as a whole; and
(3) A good faith and reasonable attempt was made to comply with all applicable terms, conditions and requirements of Sec. 230.504, Sec. 230.505 or Sec. 230.506.
(b) A transaction made in reliance on Sec. 230.504, Sec. 230.505 or Sec. 230.506 shall comply with all applicable terms, conditions and requirements of Regulation D. Where an exemption is established only through reliance upon paragraph (a) of this section, the failure to comply shall nonetheless be actionable by the Commission under section 20 of the Act. [54 FR 11374, Mar. 20, 1989, as amended at 57 FR 36473, Aug. 13, 1992]
Regulation E--Exemption for Securities of Small Business Investment
Companies
Authority: Sections 230.601 to 230.610a issued under sec. 19, 48 Stat. 85, as amended; 15 U.S.C. 77s.
Source: Sections 230.601 through 230.610a appear at 23 FR 10484, Dec. 30, 1958, unless otherwise noted.
Cross Reference: For regulations of Small Business Administration under the Small Business Investment Act of 1958, see 13 CFR, Chapter I.