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Question
Jereboah Company is a nonpublic company that wants to sell $2.7 million of preferred shares under Rule 506 of Regulation D of the Securities Act of 1933. Jereboah plans to sell to 42 investors, including 10 mutual funds. The other 32 investors are individual investors with various levels of experience in making securities investment decisions. Jereboah also hopes to attract additional investors using an advertisement in The Wall Street Journal. May Jereboah use Rule 506? Assuming it can, what disclosure must Jereboah make to the investors?
Answer
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