When Congress passed the Securities Act of 1933, it wanted to exclude security issuances "not involving any public offering" from the onerous registration process. If an issuer could avail itself of this "private offering" exemption, it could obtain its capital more quickly and cheaply than if it had to go through the registration process. In order to take advantage of this exemption, however, the conditions for abuse that led to the creation of the 1933 Act in the first place have to be avoided. Some of the actions or conditions that must be avoided are any general mailings or general solicitations, unlimited participation by unaccredited investors, and so on.
Section 4(2) of the 1933 Act, which is where the private offering exemption can be found, was initially not specific enough to permit issuers to make this "safe harbor" with certainty, though. In 1982, after decades of uncertainty, the SEC adopted Regulation D (Reg D), which provided issuers and their counsel with the certainty they needed to plan, conduct, and complete private offerings that would make this safe harbor in the securities laws.
