b'6. Choose Your Securities Exemptionany state. There is an additional Rule 504 under Regulation D that is less widely used, as it requires state pre-approval. If you follow one of these exemptions, you dont have to file periodic reports with the SEC as would be required in a public offering; however, to claim the safe harbor of these exemptions, you need to file a Form D with the SEC (and the required state securities notices). Additionally, these ex-emptions are self-executing, meaning you must establish a recordkeeping system documenting how you followed the specific rules of your selected exemption. 6Each securities exemption has a specific set of rules. Typical rules for securities exemptions may: Prohibit or restrict advertising for investorsRequire the existence of a substantive, pre-existing relationship between the issuer and investors before the offer or sale of securities Require investors to have certain income, net worth or investment experience.Limit the percentage of an investors net worth that can be invest-ed in a single offeringRequire the issuer to disclose all material facts necessary for in-vestors to make informed consentExclude certain bad actors from becoming officers, directors, managers or promoters of new offerings Prohibit payment of finders fees to unlicensed securities bro-ker-dealers Require notice filings with federal and/or state securities agencies (and payment of associated fees) regarding the sale of securities and the exemption(s) claimed.These filings must be made within specific timeframes after a sale has occurred. Most securities exemptions are self-executing. Thatmeansthat you have the burden of proving that you complied with the rules of the ex-emption in order to claim it. Think of this like an IRS tax deduction; if you meet the IRS criteria for a deduction, you can claim it, but if you are audited, you must provide documents proving you qualified for the 6See SEC publication Regulation D, Rules Governing The Limited Offer And Sale Of Securities Without Registration Under The Securities Act of 1933.49'