Regulatory Information

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The Blacksmith Fund operates under the provisions of Regulation D, Rule 506(c) of the Securities Act of 1933, which allows for a specific set of exemptions from registration requirements typically required for public securities offerings. Below, we outline how the Fund is regulated and the key exemptions that apply.

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Regulation D and Rule 506(c)

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The Blacksmith Fund is structured as a 506(c) offering, which is an exemption under Regulation D. Rule 506(c) allows the Fund to offer and sell securities to accredited investors only, and permits general solicitation and advertising to reach potential investors. This means that the Fund can publicly advertise its offerings through various media channels, including online platforms and marketing materials. However, only accredited investors—those who meet the criteria set by the SEC—are allowed to participate in the Fund.

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Accredited Investor Definition

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An accredited investor, as defined by the SEC, includes individuals who have an annual income exceeding $200,000 (or $300,000 together with a spouse) or a net worth exceeding $1 million (excluding the value of their primary residence). Certain entities, such as banks, investment companies, and large organizations, may also qualify as accredited investors.

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Exemptions Under Rule 506(c)

Because the Blacksmith Fund is structured under Rule 506(c), it benefits from the following key exemptions:

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1. No Registration with the SEC:

The Fund is not required to register its securities with the SEC, which would normally be required for public offerings. This exemption is possible because the Fund limits its investors to accredited individuals and entities, mitigating the need for extensive public filings and disclosures.

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2. General Solicitation:

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Unlike other securities offerings that may restrict how the offering can be marketed or advertised, 506(c) offerings allow the use of general solicitation. This means the Blacksmith Fund can actively advertise its investment opportunities through public channels (e.g., websites, social media, and other forms of communication). However, the Fund must take reasonable steps to verify that all investors are indeed accredited.

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3. State Blue Sky Laws:

 

While Rule 506(c) provides federal exemptions from SEC registration, the Blacksmith Fund may still need to comply with certain state-specific “Blue Sky” laws. Blue Sky laws are state-level regulations that oversee securities offerings to ensure protection for investors within those states. Depending on the state, the Fund may be required to file certain notices or comply with specific state-level requirements after the offering.

• For instance, some states (like California) may require additional filings or notices within a certain period (often 15 days after the first sale of securities). These filings inform the state securities regulators about the offering and ensure that the offering complies with state-specific regulations. The Blacksmith Fund may need to submit a Form D filing, which is a basic notification that includes information about the Fund and the offering.

 

Lack of Additional SEC Oversight

 

Under Regulation D, Rule 506(c), the Blacksmith Fund is exempt from several of the typical SEC regulatory requirements that would otherwise apply to a public offering. Notably, this means the Fund is not required to comply with certain detailed registration processes or ongoing reporting obligations, such as:

 

• Ongoing quarterly and annual filings (e.g., 10-Q, 10-K)

• Prohibitions on general solicitation (which is allowed under 506(c))

• Detailed disclosures typically required in public offerings

 

These exemptions streamline the offering process and reduce regulatory burdens, but they also come with certain responsibilities, such as ensuring that only accredited investors participate and complying with state Blue Sky laws.

 

Key Regulatory Requirements

 

1. Filing Form D:

As part of the 506(c) offering, the Blacksmith Fund is required to file Form D with the SEC, typically 15 days after the first sale of securities. This form is a simple notice that provides basic information about the offering and the issuer, ensuring compliance with the SEC’s requirements under Regulation D.

 

2. Blue Sky Laws:

As mentioned, some states, such as California,

have additional regulatory requirements. These often involve filing state-specific forms or paying filing fees to ensure the offering complies with that state’s Blue Sky laws. The specific requirements depend on the state, and the Fund will work to ensure compliance with each state where investors are located.

 

Conclusion

 

The Blacksmith Fund operates under Regulation D, Rule 506(c), which provides a streamlined regulatory framework for raising capital from accredited investors. This allows the Fund to advertise its offering publicly while maintaining compliance with key regulatory requirements such as the Form D filing with the SEC and any applicable state Blue Sky laws.

By operating under this exemption, the Blacksmith Fund benefits from reduced regulatory burdens while maintaining transparency and compliance with the necessary legal and financial protections for investors.