Rule 506(c) Accredited Investor Representation Letter

Summary

This template representation letter may be delivered by a prospective investor to assist with an issuer's verification of the investor's status as an "accredited investor" for a Rule 506(c) securities offering. This template includes practical guidance and drafting notes. In a securities offering relying on Rule 506(c) (17 C.F.R. § 230.506(c)) under the Securities Act of 1933, as amended (Securities Act), an issuer must take "reasonable steps" to verify that each investor participating in the offering is an accredited investor as defined in Rule 501(a) (17 C.F.R. § 230.501(a)) under the Securities Act. The purpose of this letter (along with the accompanying supporting documentation) is to assist the issuer with complying with this requirement. The issuer (or its placement agent) should complete all of the relevant bracketed information in this template and send it, along with a cover letter, to investors for them to complete and return. For a template cover letter, see Cover Letter to Rule 506(c) Accredited Investor Representation Letter. Note: On November 2, 2020, the SEC adopted amendments to the exempt offering framework under the Securities Act, including Rule 506(c). The amendments, among other things, revise Rule 506(c) to ease the verification requirements for investors that were previously verified. Specifically, any investor that the issuer had previously taken reasonable steps to verify as an accredited investor may remain verified if the issuer receives (1) a written representation from such person at the time of sale that they qualify as an accredited investor and (2) the issuer is not aware of information to the contrary. This method is only applicable for investors that had been previously verified within the past five years. Further, on March 12, 2025, the SEC issued a no-action letter providing new guidance on verifying accredited investor status under Rule 506(c). This guidance significantly eases the verification burden for issuers conducting private securities offerings using general advertising and solicitation. Issuers can now rely on investor self-certification for accredited investor status when certain minimum investment thresholds are met. The SEC also released new Questions 256.35 and 256.36 of the Securities Act Rules Compliance and Disclosure Interpretations providing further guidance on investor verification. For more information, see No Action Letter: Latham & Watkins (March 12, 2025) – Re: Request for Rule 506(c) Interpretative Guidance (Incoming letter dated March 6, 2025) For more information on Rule 506(c) offerings generally, see Regulation D Offerings — Rule 506 and Rule 506 General Solicitation and Startup Capital-Raising. For a full listing of key content covering Regulation D offerings, see Regulation D Resource Kit. For more resources on private placements, see Private Placements Resource Kit.