Accredited Investor Verification

Accredited Investor Verification is the process of confirming that a potential investor meets the SEC's criteria for accredited investor status before accepting their investment in a Regulation D offering. Under Rule 506(b), issuers can rely on self-certification—investors check a box or sign a representation confirming their status. Under Rule 506(c), the issuer must take 'reasonable steps' to verify accredited status through specific documentation. Acceptable verification methods under 506(c) include: reviewing tax returns for the past two years to verify income exceeding $200,000 ($300,000 with spouse), reviewing bank or brokerage statements to verify net worth exceeding $1 million (excluding primary residence), obtaining a written confirmation from a registered broker-dealer, SEC-registered investment adviser, licensed attorney, or CPA, or using a third-party verification service. Accredited investor criteria were updated in 2020 to include individuals with certain professional certifications (Series 7, 65, 82) regardless of income or net worth, and to allow spousal equivalents to pool their finances.