a. What are the requirements for Rule 506 under Reg D?
b. Inter Link sold stock to hundreds of investors. Is that a violation of Rule 506?
c. Did Inter Link comply with Rule 506?
d. Inter Link did not comply with Rule 506. Does that mean it definitely made a public offering?
e. Did Inter Link have a private offering?
f. What penalty will Inter Link and Gartner face? Under what section of the 1933 Act?
Michael Gartner founded Inter Link "to develop private, fully integrated telecommunication networks and video phone systems." Inter Link prepared an offering memorandum for a sale of its securities. The document contained no financial statements or other financial information about the company other than projections of future operations. Gartner hired more than 80 salespeople to make unsolicited telephone calls to potential investors across the country. Gartner himself held up a copy of an offering memorandum during an appearance on TV. The salespeople failed to inquire about investors' wealth or investment experience. The company also failed to file a registration statement for its securities because it claimed that the offering was exempt from registration under Rule 506 of Regulation D. InterLink raised $3,163,795 through this offering. None of the fiber optic cable, as described in the offering document, was ever installed, nor was the video phones manufactured.