SEC Rule 506 Regulation D Bad Actor Disclosure Form Template

When raising capital under SEC Rule 506 of Regulation D, issuers must navigate complex "bad actor" disqualification provisions that can derail an entire offering. This SEC Rule 506 Bad Actor Disclosure Form template is designed for private companies, investment funds, and their legal counsel to systematically screen for disqualifying events, identify covered persons, and maintain the documentation necessary to demonstrate reasonable care in compliance.

Understanding Bad Actor Disqualification

The SEC's bad actor rules, introduced in 2013, disqualify securities offerings from Rule 506 exemptions if certain "covered persons" have experienced specified criminal convictions, regulatory sanctions, court injunctions, or other disqualifying events. These provisions protect investors by preventing individuals with problematic regulatory histories from participating in private placements that bypass standard registration requirements.

For issuers, this means conducting thorough due diligence on all covered persons—including the company itself, its predecessors, affiliated issuers, directors, executive officers, general partners, managing members, promoters, investment managers, and certain significant shareholders and compensated solicitors. Failure to identify a disqualifying event can result in loss of the exemption, potential rescission rights for investors, and significant legal liability.

Why This Form Template Matters for Compliance

This Paperform template streamlines the complex process of bad actor screening and documentation. Rather than managing scattered spreadsheets, email chains, and manual questionnaires, you can collect standardized disclosures from all covered persons through a single, professional form that captures:

• Covered person identification and classification to determine who must be screened
• Comprehensive disqualifying event screening across all relevant categories
• Detailed disclosure requirements for any events that must be reported
• Reasonable care documentation to demonstrate your compliance efforts
• Certification and attestation from each respondent

The form uses conditional logic to show follow-up questions only when relevant, making the process efficient for respondents while ensuring you capture all necessary compliance information. This approach reduces respondent fatigue while maintaining thorough documentation.

Ideal for Legal Counsel, Fund Managers, and Compliance Officers

This template is specifically designed for:

Securities Attorneys: Streamline client intake for Rule 506 offerings and maintain organized records of bad actor screening for each transaction. The form can be customized per engagement and embedded directly into your client portal or shared via link.

Private Equity and Venture Capital Funds: Conduct bad actor screening for each new fund formation or portfolio company investment. Document your reasonable care procedures consistently across all offerings.

Compliance Officers and Corporate Counsel: Establish a repeatable process for ongoing compliance when issuing securities under Rule 506. Maintain centralized records that can be easily audited or reviewed.

CFOs and Finance Teams: Coordinate the collection of required disclosures from board members, executives, and other covered persons during capital raises without burdening your legal team with administrative work.

Enhancing Your Compliance Workflow with Automation

Beyond data collection, this Paperform template can serve as the foundation for a complete compliance workflow:

Stepper Integration: Use Stepper, Paperform's AI-native workflow builder, to automatically route completed forms to legal counsel for review, trigger background check requests for new covered persons, update your compliance tracking system, and send reminder emails to individuals who haven't completed the form. Stepper can also flag submissions that indicate potential disqualifying events for immediate legal review.

Papersign for Attestations: Once you've collected disclosure information, you can use Papersign to convert the submission into a formal attestation document and collect legally binding eSignatures from each covered person, creating a complete audit trail that links the original disclosure to the signed certification.

CRM and Document Management: Connect submissions to your legal practice management system, Airtable compliance tracker, or Google Drive folder structure to ensure every offering has complete, organized documentation.

Customization for Your Specific Needs

While this template provides comprehensive coverage of Rule 506 bad actor requirements, you may want to customize it based on your specific situation:

• Add offering-specific details to track which capital raise each submission relates to
• Include additional compliance certifications required by your firm or institutional investors
• Adjust covered person categories based on your entity structure (corporation, LLC, LP, etc.)
• Add international considerations for cross-border offerings or foreign persons
• Integrate with your existing compliance infrastructure through webhooks or native integrations

Professional, Compliant, and Efficient

Meeting SEC Rule 506 bad actor requirements doesn't have to mean endless paperwork and email follow-ups. This Paperform template brings structure, professionalism, and automation to your compliance process, helping you:

• Reduce legal risk through systematic, documented screening
• Save time by eliminating manual form processing and follow-up
• Demonstrate reasonable care with clear evidence of your compliance efforts
• Scale your process as you conduct multiple offerings or manage multiple funds
• Improve respondent experience with a clear, professional form that's easy to complete

Trusted by legal teams and financial professionals worldwide, Paperform is SOC 2 Type II and GDPR compliant, ensuring that sensitive disclosure information is handled with appropriate security controls. The platform's conditional logic, calculation engine, and integration capabilities make it ideal for complex regulatory compliance forms that require both precision and usability.

Whether you're a securities attorney managing multiple client offerings, a fund manager conducting annual compliance reviews, or a corporate counsel preparing for your next capital raise, this SEC Rule 506 Bad Actor Disclosure Form template provides the foundation for efficient, defensible compliance with one of private securities law's most critical requirements.