"Under SEC law, a company that offers its own securities must register these investments with the SEC before it can sell them unless it meets an exception. One of those exceptions is selling unregistered investments to accredited investors.
To become an accredited investor the (SEC) requires certain wealth, income or knowledge requirements. The investor must fall into one of three categories. Firms selling unregistered securities must put investors through their own screening process to determine if investors can be considered an accredited investor.
The Verifying Individual or Entity should take reasonable steps to verify and determined that an Investor is an "accredited investor" as such term is defined in Rule 501 of the Securities Act, and hereby provides written confirmation. This letter serves to help the Entity determine status, take Investor statements regarding information, and waiver of claims."
Delaware Accredited Investor Qualification and Verification Requirements for Reg D, Rule 506(c) Offerings
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An investment vehicle, such as a fund, would have to determine that you qualify as an accredited investor. To do this, they would ask you to fill out a questionnaire and possibly provide certain documents, such as financial statements, credit reports, or tax returns.
In the case of a successful verification, you'll get an attorney's letter certifying that you have been verified as an accredited investor pursuant to standards required by federal laws.
The company cannot use general solicitation or advertising to market the securities. The company may sell its securities to an unlimited number of "accredited investors" and up to 35 other purchasers.
Companies must give non-accredited investors disclosure documents that are generally the same as those used in Regulation A or registered offerings, including financial statements, which in some cases may need to be certified or audited by an accountant.
Regulation D requires that an account, to be classified as a ''savings deposit,'' must not permit more than six convenient transfers or withdrawals per month from the account.
In lieu of providing income or net assets information, you may provide a professional letter from a licensed CPA, attorney, investment advisor or registered broker-dealer. The letter should state that the professional service provider has a reasonable belief that you are an Accredited Investor.
If you are accredited based on income, you will need to provide documentation in the form of tax returns, W-2s, or other official documents that show you meet the required income threshold for the prior two years.
Since there is no actual accreditation process, there's no need for self-certification. Of course, accredited investors may secure the required financial statements ahead of time so that it is easier to prove their status during the investor verification process.
Reviewing bank statements, brokerage statements, and other similar reports to determine net worth. Obtaining written confirmation of the investor's accredited investor status from one of the following persons: a registered broker-dealer, an investment adviser registered with the SEC, a licensed attorney, or a CPA.
For the net worth test, you (or you and a spouse or spousal equivalent) must show enough assets to evidence a net worth of at least $1,000,000 USD ignoring the value of your primary residence and after discounting all your other liabilities (including liabilities exceeding the value of your primary residence and ...