Accredited Investor Verification Methods Under Rule 506(c)
Rule 506(c)'s mandatory verification requirement is often the single biggest operational difference issuers notice when they move from 506(b) to a publicly marketed raise — and the SEC gives issuers several accepted paths to satisfy it.
Income-based verification
Reviewing an investor's tax returns, W-2s, or other IRS forms for the two most recent years, along with a written representation that the same income level is expected to continue, is one accepted method for individuals relying on the income test.
Net-worth-based verification
For the net-worth test, issuers can review bank statements, brokerage statements, tax assessments, and a credit report, cross-referenced against a written representation that all liabilities needed to calculate net worth have been disclosed.
Third-party confirmation letters
Perhaps the most common method in practice: a written confirmation from a registered broker-dealer, an SEC-registered investment adviser, a licensed attorney, or a certified public accountant, stating that the professional has taken reasonable steps within the prior three months to verify the investor's accredited status.
Practical takeaway
Whichever method an issuer chooses, consistency and documentation matter more than the specific method — build one verification workflow, apply it to every investor, and retain the records, since the burden of proof sits with the issuer if the exemption is ever questioned.
This article is provided for general informational and educational purposes only and does not constitute legal, financial, tax, or investment advice. Nothing here is an offer to sell or a solicitation to buy any security. Consult qualified securities counsel before relying on any exemption or filing deadline discussed above.