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Accredited Verification Requirements
Regulation D Rule 506(c) Investor Verification Standards and Protocols
In purchasing securities through a 506(c) Offering, the Company is obligated to verify any participating investor’s status as an accredited investor in accordance with Rule 501(a) of Regulation D. Most issuers use third party verification letter from a broker-dealer, attorney, CPA, or a third party speciality services like verifyinvestor.com) to obtain proper and suitable verification. It is possible for the investor to provide bank statements and/or IRS tax forms; however, most issers do not want the responsibility of reviewing those types of records and forms.
Reliance on Determination by Specified Third Parties to Provide Verification: The Company may satisfy the verification requirement if it obtains a written confirmation from a registered broker-dealer (who the investor has had an account with longer than 6 months), an SEC-registered investment adviser, a licensed attorney, or a certified public accountant that within the prior three months such person or entity has taken reasonable steps to verify that the purchaser is an accredited investor and has determined that the purchaser is an accredited investor. Third party services, such as verifyinvestor.com (managed by an attorney) are also qualified third party providers of verifications.
Proper verification must be submitted with the subscription for securities in order for the Company to verify the investor’s suitability for investment and accept the subscription.
Accredited Investor Qualifications:
- a bank, savings and loan association, insurance company, registered investment company, business development company, or small business investment company or rural business investment company
- an SEC-registered broker-dealer, SEC- or state-registered investment adviser, or exempt reporting adviser
- a plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets in excess of $5 million
- an employee benefit plan (within the meaning of the Employee Retirement Income Security Act) if a bank, insurance company, or registered investment adviser makes the investment decisions, or if the plan has total assets in excess of $5 million
- a tax exempt charitable organization, corporation, limited liability corporation, or partnership with assets in excess of $5 million
- a director, executive officer, or general partner of the company selling the securities, or any director, executive officer, or general partner of a general partner of that company
- an enterprise in which all the equity owners are accredited investors
- an individual with a net worth or joint net worth with a spouse or spousal equivalent of at least $1 million, not including the value of his or her primary residence
- an individual with income exceeding $200,000 in each of the two most recent calendar years or joint income with a spouse or spousal equivalent exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year or
- a trust with assets exceeding $5 million, not formed only to acquire the securities offered, and whose purchases are directed by a person who meets the legal standard of having sufficient knowledge and experience in financial and business matters to be capable of evaluating the merits and risks of the prospective investment
- an entity of a type not otherwise qualifying as accredited that own investments in excess of $5 million
- an individual holding in good standing any of the general securities representative license (Series 7), the investment adviser representative license (Series 65), or the private securities offerings representative license (Series 82)
- a knowledgeable employee, as defined in rule 3c-5(a)(4) under the Investment Company Act, of the issuer of securities where that issuer is a 3(c)(1) or 3(c)(7) private fund or
- a family office and its family clients if the family office has assets under management in excess of $5 million and whose prospective investments are directed by a person who has such knowledge and experience in financial and business matters that such family office is capable of evaluating the merits and risks of the prospective investment
To participate in this investment you will need to be an accreditated investor that meets SEC Guidelines.
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