In purchasing securities through a 506(c) Offering, the Company is obligated to verify any participating investor’s status as an accredited investor in accordance with Rule 501 of Regulation D. There are three primary methods the Company may employ to comply with the verification standards. Note – most issuers use third party verification (broker-dealer letter, attorney letter, CPA letter, or a third party speciality services like verifyinvestor.com) to obtain proper and suitable verification. It is possible for the investor to provide bank statements and/or IRS tax forms – however most clients do not want the responsibility of reviewing those types of records and forms.
Investors in the offering will need to provide the Company with verification that meets the standards and form using one or multiple methods as listed below:
Income: The Company may verify an individual’s status as an accredited investor on the basis of income by reviewing copies of any IRS form that reports net income, such as Forms W-2 or 1099 (which are typically filed by an employer or other third party payor), or Forms 1040 filed by the prospective purchaser (with non-relevant information permitted to be redacted). Under this method, the Company must review IRS forms for the two most recent years and obtain a written representation from the prospective purchaser that he or she has a reasonable expectation of attaining the necessary income level for the current year. Where accredited investor status is based on joint income with the person’s spouse, the IRS forms and representation must be provided with respect to both the purchaser and the spouse.
Net Worth: Under this method, the Company will need to review bank or brokerage statements or third-party appraisal reports to verify the purchaser’s assets and a credit report to verify liabilities, in each case dated within the prior three months, and will need to obtain a written representation from the prospective purchaser that all liabilities have been disclosed. Where accredited investor status is based on joint net worth with the person’s spouse, the asset and liability documentation and representation must be provided with respect to both the purchaser and the spouse.
Reliance on Determination by Specified Third Parties to Provide Verification: The Company may satisfy the verification requirement if it obtains a written confirmation from a registered broker-dealer (who the investor has had an account with longer than 6 months), an SEC-registered investment adviser, a licensed attorney, or a certified public accountant that within the prior three months such person or entity has taken reasonable steps to verify that the purchaser is an accredited investor and has determined that the purchaser is an accredited investor. Third party services, such as verifyinvestor.com (managed by an attorney) are also qualified third party providers of verifications.
Proper verification must be submitted with the subscription for securities in order for the Company to verify the investor’s suitability for investment and accept the subscription.
Any natural person whose individual net worth, or joint net worth with that person's spouse, exceeds $1,000,000.
In order to participate in this investment you will need to be an accreditated investor that meets SEC GUIDELINES.
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