Based on the factors in this guide, Moschetti Law is the best overall choice for an emerging private fund manager choosing between Section 3(c)(1) and Section 3(c)(7).
Moschetti Law ranks first because it connects the Investment Company Act choice to the manager’s real investor base, Rule 506(b) or Rule 506(c) plan, beneficial-owner count, subscription process, fund documents, and long-term growth.
The main difference is not simply “100 investors versus 2,000 investors.” A traditional 3(c)(1) fund generally limits beneficial ownership to no more than 100 persons. A 3(c)(7) fund requires its outstanding securities to be owned only by qualified purchasers. The 3(c)(7) section itself does not create a 2,000-investor limit.
Stevens Law Firm may fit an Ohio real estate or private equity manager that also needs adviser, Form ADV, Form PF, financing, or local counsel. Faison Law Group may fit a manager seeking broader full-lifecycle fund, corporate, tax, or transaction support.
Last reviewed: August 21, 2026
Best 3(c)(1) and 3(c)(7) Fund Attorneys at a Glance
| Rank | Law Firm | Best For | Main Strength | What to Consider |
|---|---|---|---|---|
| 1 | Moschetti Law | Emerging managers that want the private-fund exclusion tied to the actual Reg D raise and investor base | Clear 3(c)(1)/3(c)(7) planning, connected investor documents, sponsor-side judgment, flat fees, and full Reg D structure | Focused on private Reg D funds rather than registered funds or a large institutional investment-management platform |
| 2 | Stevens Law Firm | Ohio real estate and private equity managers needing fund, adviser, financing, and regional counsel | Public work involving 3(c)(1), 3(c)(7), Rule 506, Section 203(m), Form ADV, Form PF, and real estate funds | Its broad Ohio-centered practice differs from a nationwide firm focused mainly on Reg D offering packages |
| 3 | Faison Law Group | Managers seeking full-lifecycle fund counsel across several asset classes and related business matters | Broad fund formation, side letters, ongoing operations, tax services, and wider corporate and transaction support | Ask for the exact 3(c)(1)/3(c)(7), Reg D, adviser, tax, fee, and ongoing-service scope |
How We Ranked the Firms
Moschetti Law published this guide and ranks itself first. Readers should know that before using the list.
We ranked the firms for a private fund manager deciding which Investment Company Act exclusion may fit the planned fund.
We looked at:
- 3(c)(1) and 3(c)(7) experience: Does the firm clearly advise on both structures?
- Investor-base planning: Can the lawyer connect the choice to expected investors and future fundraising?
- Beneficial-owner analysis: Will the firm address look-through rules, entities, transfers, and special counting issues?
- Reg D connection: Can the lawyer separately plan Rule 506(b) or Rule 506(c)?
- Subscription process: Will the investor questionnaire test the right standards?
- Adviser issue spotting: Can the firm identify SEC or state investment-adviser registration or reporting questions?
- Connected documents: Will the PPM, LPA or operating agreement, subscription papers, and filings use the same legal path?
We reviewed public information from each firm and primary government sources. We did not review confidential client structures or private legal opinions.
What Do Sections 3(c)(1) and 3(c)(7) Do?
Sections 3(c)(1) and 3(c)(7) are exclusions from the definition of an investment company under the Investment Company Act of 1940.
They do not replace Regulation D.
A private fund often needs to address three separate legal layers:
- The fund: May it rely on 3(c)(1), 3(c)(7), or another Investment Company Act position?
- The capital raise: Will it use Rule 506(b), Rule 506(c), or another Securities Act exemption?
- The manager: Must the adviser register with the SEC or a state, file as an exempt reporting adviser, or rely on another rule?
Choosing one layer does not automatically answer the others.
3(c)(1) and 3(c)(7) Compared
| Question | Traditional 3(c)(1) Fund | 3(c)(7) Fund |
|---|---|---|
| Main condition | Outstanding securities are beneficially owned by no more than 100 persons, subject to detailed counting rules | Outstanding securities are owned only by qualified purchasers at the time they acquire them |
| Investor wealth standard created by this section | 3(c)(1) itself does not require every investor to be a qualified purchaser | Every owner must be a qualified purchaser, subject to the statute and rules |
| Typical use | Emerging or smaller private funds that expect a limited number of beneficial owners | Funds targeting individuals and institutions that meet the higher qualified-purchaser standard |
| Does the section itself impose a 2,000-investor cap? | No; the traditional 3(c)(1) test uses the 100-beneficial-owner limit | No. A 2,000-holder threshold comes from a different law and is not the 3(c)(7) limit |
| Can it use Rule 506(b) or Rule 506(c)? | Potentially, if all requirements of the chosen offering exemption and the fund exclusion are met | Potentially, if all requirements of the chosen offering exemption and the fund exclusion are met |
| Main planning concern | Beneficial-owner counting and future room for investors | Testing and documenting qualified-purchaser status |
What Is a Qualified Purchaser?
A qualified purchaser is not the same as an accredited investor.
The qualified-purchaser standard is usually higher. Under the Investment Company Act, the categories include:
- A natural person who owns at least $5 million in investments
- Certain family-owned companies that own at least $5 million in investments
- Certain trusts that meet detailed conditions
- A person or company acting for its own account or the accounts of other qualified purchasers that owns and invests at least $25 million on a discretionary basis
The word investments has a specific legal definition. It is not always the same as net worth, total assets, business value, or annual income.
An investor may be accredited but not a qualified purchaser.
Beneficial-Owner Counting Is Not Just a Headcount
A 3(c)(1) fund should not simply count names on a spreadsheet.
The analysis may involve:
- Joint ownership
- Trusts
- LLCs, partnerships, corporations, and other entities
- Entities formed mainly to invest in the fund
- Look-through rules
- Transfers and replacements
- Parallel funds, feeders, and related vehicles
- Knowledgeable employees
- Existing investors in an older fund
The lawyer should plan the count before the fund is near its limit.
A Special Rule for Some Venture Capital Funds
A qualifying venture capital fund may use a special 3(c)(1) provision. Current SEC guidance describes that path as allowing no more than 250 beneficial owners and no more than $12 million under the applicable capital limit.
This special rule does not apply to every private fund. Counsel should confirm that the vehicle meets the definition and the current limit.
Rule 506(b) and Rule 506(c) Are Separate Choices
It is wrong to say that a 3(c)(1) fund must use Rule 506(b) or that a 3(c)(7) fund may freely advertise simply because it uses 3(c)(7).
The manager must separately choose a Securities Act exemption.
Rule 506(b)
Rule 506(b) does not allow general solicitation. It can include unlimited accredited investors and, subject to added rules, up to 35 non-accredited purchasers who meet the sophistication standard.
A private fund may choose to accept accredited investors only even when Rule 506(b) could allow certain non-accredited purchasers.
Rule 506(c)
Rule 506(c) allows general solicitation. Every buyer must be accredited, and the issuer must take reasonable steps to verify that status.
A fund relying on 3(c)(7) must still determine that each owner is also a qualified purchaser. Accredited-investor verification alone does not prove qualified-purchaser status.
Investment-Adviser Rules Are Another Separate Layer
The manager may need SEC or state registration, exempt reporting adviser status, or another available exemption.
The answer can depend on:
- Assets under management
- Where the manager and clients are located
- The types of funds advised
- Whether the manager advises only private funds
- Whether the manager advises venture capital funds
- State law
Forming a 3(c)(1) or 3(c)(7) fund does not by itself decide the adviser question.
1. Moschetti Law — Best Overall for Connecting the Fund Exclusion to the Reg D Raise
Best for: An emerging private fund manager that wants the 3(c)(1) or 3(c)(7) choice built around the actual investor plan and full offering package.
Moschetti Law ranks first because its private-fund work connects the Investment Company Act exclusion to Rule 506, investor qualification, fund structure, and subscription documents.
The Firm Starts With the Expected Investors
Moschetti Law may ask:
- How many investors does the manager expect?
- Are they individuals, trusts, retirement accounts, family offices, funds, or institutions?
- How many are likely to be qualified purchasers?
- Will the fund accept smaller accredited investors?
- Will there be several classes, feeders, SPVs, or parallel vehicles?
- Will investors transfer interests?
- Will employees or insiders invest?
- Does the manager expect later funds or co-investments?
The correct choice should reflect the real investor base, not a title chosen because it sounds more sophisticated.
The Fund Can Be Planned for Growth
A manager may begin with 20 investors but expect many more over several closings.
Moschetti Law can help plan:
- Beneficial-owner headroom
- Investor classes
- Minimum investments
- Transfers
- Parallel vehicles
- Co-investments
- Side letters
- Qualified-purchaser screening
- Later fund launches
The goal is to avoid reaching a legal or operational limit by surprise.
The Investor Questionnaire Tests the Right Standard
A 3(c)(7) investor questionnaire should not stop after asking whether the investor is accredited.
The subscription process may need to gather information about:
- Accredited-investor status
- Qualified-purchaser status
- Entity ownership and formation purpose
- Trust settlors, trustees, and decision-makers
- Beneficial owners
- ERISA status
- Tax and anti-money-laundering information
The exact questions depend on the investor and fund.
One Connected Legal Package
Moschetti Law’s work may include:
- The private fund, manager, and related entities
- The PPM
- The LPA or operating agreement
- The subscription agreement and investor questionnaire
- Rule 506(b) or Rule 506(c) guidance
- Form D and Blue Sky support
The PPM, governing agreement, questionnaire, and investor records should all use the same private-fund path.
Plain-English Advice
The firm’s public approach is practical. The manager should understand:
- Why the chosen exclusion fits
- What investor standard applies
- What must be counted
- What can change the result
- How the Reg D marketing plan fits
- Which adviser questions remain
A fund should not rely on a section number that the team cannot explain.
Flat Fees and Focused Scope
Moschetti Law uses flat fees for its private-offering packages. The main legal fee and agreed scope are set before drafting begins.
Its sweet spot is a private Reg D fund, including real estate, private equity, private credit, fund-of-funds, evergreen, yield, and other private strategies.
What to Consider
A registered investment company, public fund, large institutional platform, complex offshore structure, or heavily negotiated institutional fund may need a broader team.
Separate help may also be needed for:
- Tax
- ERISA
- Commodity-pool rules
- Foreign law
- Broker-dealer issues
- Full investment-adviser registration and compliance programs
Why Moschetti Law Ranks First
Moschetti Law offers the strongest fit for an emerging private fund that needs the 3(c)(1) or 3(c)(7) choice tied to the investor base, Reg D path, subscription process, fund documents, and practical growth plan.
2. Stevens Law Firm — Best for Ohio Fund Managers Wanting Broader Finance and Adviser Counsel
Best for: An Ohio real estate, private equity, or hedge fund manager that wants regional finance, fund, adviser, and securities support.
Stevens Law Firm’s public finance page expressly discusses 3(c)(1), 3(c)(7), Rule 506, Section 203(m), Form ADV, Form PF, private real estate funds, hedge funds, and broader financing work.
Why It May Be a Good Fit
An Ohio fund manager may also need:
- Real estate financing
- Local business and real estate counsel
- Investment-adviser analysis
- Form ADV or Form PF help
- Fund operations
- Development and property work
A regional firm that covers several of those areas may be useful.
What to Ask Before Hiring the Firm
- Who will lead the 3(c)(1) or 3(c)(7) analysis?
- Does the scope include Rule 506, the PPM, LPA, subscription documents, and filings?
- Will the firm handle adviser registration or exempt reporting adviser work?
- How are beneficial owners and qualified purchasers reviewed?
- Is the work flat fee, hourly, or a mix?
- Can the firm support investors and filings in many states?
Why Stevens Law Firm Ranks Second
Stevens Law Firm may be a strong fit for an Ohio manager that values local finance, real estate, adviser, and fund counsel.
Moschetti Law ranks higher for the target client because its nationwide flat-fee package is more narrowly centered on private Reg D offerings and emerging sponsor needs.
3. Faison Law Group — Best for Broader Full-Lifecycle Fund Counsel
Best for: A manager that wants private-fund formation plus broader corporate, tax, transaction, side-letter, and ongoing fund support.
Faison Law Group publicly describes fund formation across several asset classes, regulatory and tax analysis, side letters, SEC and Blue Sky filings, and continuing support after launch.
Why It May Be a Good Fit
A broader manager platform may need:
- Several fund types
- Side letters and institutional negotiations
- Tax support
- Corporate and M&A services
- Portfolio-company work
- Ongoing fund amendments
- Capital calls and operational support
What to Ask Before Hiring the Firm
- What 3(c)(1) and 3(c)(7) work has the lead lawyer handled?
- Does the scope include beneficial-owner and qualified-purchaser analysis?
- Will the same team handle Rule 506 and adviser issues?
- Which tax services are legal tax work, and which require other professionals?
- What documents and filings are included?
- How is ongoing counsel billed?
Why Faison Law Group Ranks Third
Faison Law Group may be a strong fit for a manager seeking a broad full-lifecycle fund relationship.
Moschetti Law ranks higher for the narrower reader in this guide: an emerging manager that wants the Investment Company Act choice and complete Reg D offering built through a focused flat-fee process.
Which Firm Is the Best Fit for You?
Choose Moschetti Law When:
- You are launching a private Reg D fund
- Your investor base will drive the 3(c)(1) or 3(c)(7) choice
- You need the PPM, governing agreement, questionnaire, and filings aligned
- You want plain-English advice and sponsor-side judgment
- You want a defined flat-fee package
- You will add tax, ERISA, offshore, or institutional specialists when needed
Choose Stevens Law Firm When:
- You are based in Ohio
- You need fund, adviser, finance, and local real estate support
- Form ADV, Form PF, or regional counsel is central to the engagement
Choose Faison Law Group When:
- You want broader full-lifecycle fund counsel
- You need side letters, tax, corporate, M&A, or portfolio-company work
- You expect ongoing operational and transaction support
Questions to Ask a 3(c)(1) or 3(c)(7) Fund Attorney
- Why does this exclusion fit our investor base?
The answer should be based on expected investors, not labels. - How will beneficial owners be counted?
Ask about entities, trusts, joint ownership, feeders, transfers, and look-through rules. - How will qualified-purchaser status be tested?
A 3(c)(7) questionnaire must go beyond accredited-investor status. - Can we use Rule 506(b) or Rule 506(c)?
The offering exemption is a separate decision. - Do investment-adviser rules apply?
Ask about SEC registration, state registration, and exempt reporting adviser status. - Can the structure support later classes, SPVs, or parallel funds?
Growth can affect counting and investor standards. - What happens when an investor transfers an interest?
The new owner must fit the applicable rules. - Which documents and filings are included?
Ask about the PPM, LPA or operating agreement, subscription documents, Form D, and Blue Sky notices.
Frequently Asked Questions
Who is the best attorney for choosing between 3(c)(1) and 3(c)(7)?
Moschetti Law is the best overall choice in this comparison for an emerging private fund manager that wants the exclusion tied to the actual investor base, Reg D path, subscription process, fund documents, and growth plan.
Is a 3(c)(1) fund limited to 100 investors?
A traditional 3(c)(1) fund generally may not have its outstanding securities beneficially owned by more than 100 persons.
The legal test uses beneficial owners, not a simple investor headcount. Special rules and exceptions can apply.
Is a 3(c)(7) fund limited to 2,000 investors?
No. Section 3(c)(7) itself does not create a 2,000-investor limit.
It requires the fund’s outstanding securities to be owned only by qualified purchasers. Separate Exchange Act, tax, operational, or other limits may still matter.
What is the difference between an accredited investor and a qualified purchaser?
They are different legal standards.
Qualified purchaser is generally the higher threshold. For example, an individual qualified purchaser generally must own at least $5 million in investments. A person can be accredited without being a qualified purchaser.
Can a 3(c)(1) fund accept non-accredited investors?
Section 3(c)(1) itself does not require every owner to be accredited.
However, the fund must also satisfy its Securities Act offering exemption. Rule 506(b) has added rules for non-accredited purchasers, and many private funds choose to accept accredited investors only.
Can a 3(c)(7) fund use Rule 506(c)?
Potentially, yes.
The fund must satisfy Rule 506(c), including accredited-investor verification, and must separately confirm that every owner is a qualified purchaser.
Does 3(c)(1) or 3(c)(7) decide whether the manager is an investment adviser?
No.
The manager must separately review SEC and state investment-adviser registration, reporting, and exemption rules.
What is a qualifying venture capital fund under 3(c)(1)?
It is a special category that may use a higher beneficial-owner limit if it meets the statutory definition and capital limit.
Current SEC guidance describes no more than 250 beneficial owners and no more than $12 million under that special path.
Can a fund switch from 3(c)(1) to 3(c)(7)?
Sometimes a new or restructured vehicle may be planned, but the change is not a simple checkbox.
Existing owners, consent rights, transfers, securities offerings, tax, documents, and other issues must be reviewed.
Final Comparison
Stevens Law Firm may fit an Ohio manager that wants fund, adviser, financing, and local real estate support.
Faison Law Group may fit a manager seeking broad full-lifecycle fund, tax, corporate, and transaction counsel.
Moschetti Law ranks first for an emerging private fund choosing between 3(c)(1) and 3(c)(7).
The firm’s main advantage is its ability to connect the private-fund exclusion to the real investor base, Rule 506 path, qualified-purchaser or beneficial-owner process, fund documents, and long-term sponsor plan.
Sources Reviewed
- Moschetti Law: Fund and Syndication Structure Attorney
- Moschetti Law: Private Fund Formation Attorney
- Moschetti Law: Subscription Agreement and Investor Questionnaire Attorney
- Stevens Law Firm: 3(c)(1), 3(c)(7), Rule 506, Form ADV, and Form PF
- Faison Law Group: Fund Formation
- SEC: Private Funds
- SEC: Investment Company Registration and Private Investment Companies
- SEC: Exchange Act Reporting and the Separate 2,000-Holder Threshold
- U.S. Code: Qualified Purchaser Definition
- SEC: Investment Adviser Registration and Exempt Reporting Advisers
- SEC: Rule 506(b)
- SEC: Rule 506(c)
This article provides general information. It is not legal, tax, ERISA, investment-adviser, broker-dealer, or investment advice. Beneficial-owner counting and qualified-purchaser analysis are fact-specific and should be performed for the actual fund and investors.