How to verify an accredited investor

Verifying Accredited Investors

[fb_button]We have used the following method for verifying accredited investors, since most of our staff started working with Reg D in 1998. It was modified in 2013 to include the new general solicitation rules, Rule 506(c).

To properly verify the investor, you’ll need to check the following:

  • Income
  • Assets
  • Liabilities

Regulation D provides a few different ways to verify whether someone is accredited. We typically include an item from each category above, just to be on the safe side. We include these in our files for each investor.

Start with:

For Income

Any one of the following IRS forms for most recent 2 years.

  • Form 1040
  • Form 1065
  • W-2 Form
  • Form 1099
  • Schedule K-1

 

For Assets

Any one of the following:

  • Bank Statements
  • Brokerage Statements
  • Certificates of Deposit
  • Life Insurance Statements
  • Annuity Statements
  • Trust Statements
  • Tax Assessments
  • Certified Appraisal Reports

 

For Liabilities

Attach the following:

  • Consumer Credit Report

 

Alternative

A letter from one of the following confirming they have taken reasonable steps, within the prior 3 months, to verify that the purchaser is accredited.

  • A registered broker-dealer;
  • A registered investment advisor;
  • A licensed attorney;
  • A CPA

We include an Investor Questionnaire in our PPM Template Packages, however, you can purchase these individually in our store by Clicking Here.

About the Author

506 Docs StaffWilliam D. Kyle, founder and Managing Member, possesses more than 35 years of experience consistently delivering exceptional valuation, market share, profit and business growth within rapidly changing environments. Possessing strong decisive executive leadership, Bill’s experience transcends organizations from start-ups, including Flight Dynamics, Inc. [acquired by Honeywell] and FLIR Systems, Inc. to Fortune 1000 multi-billion dollar international companies including Groupe Bull and Zenith Data Systems. Customer focused and performance driven, Bill’s expertise includes strategic business development, capital acquisition strategies, strategic planning, marketing, sales and business development. As a senior-level executive, Bill has been instrumental in raising private investment capital, multiple IPO’s and P.I.P.E.s, reverse mergers and strategic acquisitions. An accomplished author, Bill has published several articles and was awarded the SAE Award for Technical Excellence for his article entitled, “Holographic HUDs in Commercial Aircraft.” While in the USAF, Bill was a select member of a USAF briefing team responsible for presenting multimedia presentations to Members of Congress and The President of The United States. Bill was a highly decorated USAF F-4 fighter pilot possessing over 2,000 hours in the F-4 including more than 325 combat hours during the Viet Nam War. Bill possesses a Bachelor of Science Degree in Accounting and a Master of Science Degree in Human Resource Management. Bill is also a member of The F-4 Phantom II Society, Order of Daedalians and Red River Valley Fighter Pilot Association.View all posts by 506 Docs Staff