Rule 506(c) Third-Party Accredited Investor Verification Letter

Summary

This template is a letter that may be delivered by a third-party verifier to assist with an issuer’s verification of a prospective 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. Under Rule 506(c)(2)(ii), an issuer is deemed to have taken such reasonable steps if it receives a written confirmation from a permitted third-party verifier (i.e., registered broker-dealers, registered investment advisers, licensed attorneys, and certified public accountants) confirming that the verifier has taken reasonable steps to verify the investor’s status, particularly for the income or net worth tests. If this method is used, the third-party verifier should provide a written confirmation that is substantively similar to the following template. Note: On March 12, 2025, the Securities and Exchange Commission 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 an example of a letter that may be provided by an issuer to an investor for verification purposes, see Rule 506(c) Accredited Investor Representation Letter. 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 information on private placements, see Private Placements Resource Kit.