The SEC has provided a “reasonable care” exception from the prohibition on use of Rule 506 of Regulation D, Regulation crowdfunding, and Regulation A if the issuer can establish that it did not know and, in the exercise of reasonable care, could not have known, that a disqualification existed because of the presence or participation of a disqualified covered person. The SEC notes that the reasonable care exception is necessary because there is no central repository that aggregates information from all the federal and state courts and regulatory authorities that would be relevant in determining whether covered persons have a disqualifying event in their past. In order to qualify for the reasonable care exception, the issuer must make a factual inquiry into whether any disqualifications existed. The SEC notes that the nature and the scope of the factual inquiry would vary based on the circumstances of the issuer and the other offering participants. Obtaining a CrowdCheck “Bad Actor” Report would constitute such a factual inquiry.