Accredited Investor Verification for 506(c) Deals

In a Rule 506(c) offering, the sponsor must take reasonable steps to verify that every investor is accredited before they invest. The SEC rule lists methods that count, including reviewing two years of tax forms, reviewing recent statements and a credit report, or getting a letter from a registered broker-dealer, investment adviser, attorney or CPA. Since March 2025, SEC staff has also accepted high minimum investments plus written representations.

Who needs to verify accredited investors?

Only issuers using Rule 506(c), the exemption that allows public marketing. In a 506(b) offering, investors can generally self-certify, but you can't advertise. If you advertise your deal publicly, such as on social media or an open website, you're in 506(c) territory and verification is required. See 506(b) vs. 506(c).

How do you verify an accredited investor?

Rule 506(c) lists five non-exclusive methods. The three that fit most new investors are below, plus the 2025 high-minimum option from SEC staff:

Method	What the investor provides	Best for
Income	IRS forms showing income for the two most recent years, plus a written statement they expect the same this year	Investors who qualify on income
Net worth	Bank, brokerage or other asset statements and a credit report, all dated within the prior three months, plus a statement that all liabilities are disclosed	Investors who qualify on net worth
Professional letter	Written confirmation from a registered broker-dealer, SEC-registered investment adviser, licensed attorney or CPA that they verified the investor within the prior three months	Most investors; the simplest route
High minimum investment	An agreement to invest at least $200,000 (individuals) or $1,000,000 (entities), plus written representations	Large checks, per the March 2025 SEC staff letter

The income and net worth tests themselves are covered in the accredited investor definition.

How does the high-minimum method work?

On March 12, 2025, SEC staff issued a no-action letter in response to a request from the law firm Latham & Watkins. It says a high minimum investment can be a reasonable step to verify accredited status, when:

The investor agrees to invest at least $200,000 as an individual, or at least $1,000,000 as an entity. For an entity that's accredited only because all its owners are, the minimum is $1,000,000, or $200,000 per owner if it has fewer than five owners who are all individuals.
The investor confirms in writing that they're accredited and that the minimum isn't financed by a third party for this purpose.
The sponsor doesn't actually know anything that contradicts those statements.

This helps with large checks, but many syndications accept much smaller checks, so most investors will still need one of the other methods.

Who can write an accredited investor verification letter?

Under the rule, written confirmation can come from a registered broker-dealer, an SEC-registered investment adviser, a licensed attorney in good standing, or a certified public accountant who is registered and in good standing. Many investors ask their own CPA or attorney. Third-party verification services also do this for a fee.

What mistakes do sponsors make with verification?

Relying on a checkbox. Self-certification alone doesn't meet 506(c) for a new investor. The exceptions are the high-minimum route and repeat investors the same issuer verified within the past five years.
Verifying after the money arrives. Verify before you accept funds.
Using stale documents. Net worth documents and professional letters must be from the prior three months.
Storing sensitive documents carelessly. Tax returns and statements need secure handling.
Re-verifying from scratch every deal. It frustrates repeat investors. A reusable verification, renewed when it expires, keeps them coming back.

How DoorRaise verifies investors

Investors on a DoorRaise deal prove they're accredited once, with a professional letter, income documents or net worth documents. Third-party verification costs $95 per investor, and investors reuse it on future deals while it's still current. Verification happens before anyone signs or funds escrow.

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FAQ

How do you prove you're an accredited investor?

Usually with a letter from your CPA, attorney, SEC-registered investment adviser or registered broker-dealer, or by sharing two years of tax returns or recent statements and a credit report.

Can investors self-certify in a 506(c) offering?

Not for a first-time investor. Self-certification works in 506(b). In 506(c), a written statement counts in two main cases: when paired with a high minimum investment under the March 2025 SEC staff letter, or when the same issuer verified the investor within the past five years.

How long does accredited investor verification last?

Under the rule's listed methods, net worth documents and professional letters must be from the prior three months. If the same issuer verified an investor before, it can rely on the investor's written statement for up to five years from that check. A new issuer usually needs a fresh check.

Can my CPA write my accredited investor letter?

Yes. A registered CPA in good standing can provide written confirmation that they verified your status.

Do I need to verify investors in a 506(b) deal?

The SEC doesn't require the same verification steps in 506(b), but you need a reasonable belief that each investor is accredited, or that any non-accredited investor (up to 35) is sophisticated. You also can't advertise the deal.

Sources

This post is general information, not legal advice. DoorRaise is not a broker-dealer, investment adviser or funding portal.