Third-Party Accredited Investor Verification Back-up Certificate

Summary

This template is a back-up certificate that a prospective investor may deliver to a third-party verifier in connection with 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)) of 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 third-party verifier (i.e., registered broker-dealers, registered investment advisers, licensed attorneys, and certified public accountants) confirming the investor’s status, particularly under the net worth or income tests. As a prerequisite to providing such written confirmation, the verifier may require the investor to provide representations similar to those set out in this back-up certificate. 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 third-party accredited investor verification letter, see Rule 506(c) Third-Party Accredited Investor Verification 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 on private placements generally, see Private Placements Resource Kit.