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Can a 506(c) issuer rely on investor self-certification?

The short answer. Generally no. Rule 506(c) requires the issuer to take reasonable steps to verify that each investor is accredited — a higher bar than the self-certification allowed under 506(b). There is one narrow exception: a March 2025 SEC staff no-action letter lets an issuer rely on the investor's written representations when the investment meets a high minimum — at least $200,000 for an individual and $1,000,000 for an entity. For the typical syndication with a $25,000-$100,000 minimum, that exception is unavailable, and ordinary verification still applies.

What 506(c) normally requires

Rule 506(c) is the exemption that lets an issuer advertise a private offering. The trade-off is that every purchaser must be accredited, and the issuer must take reasonable steps to verify it — the SEC deliberately set that bar higher than a checkbox. Reviewing income or asset documents, or obtaining a written confirmation from a licensed CPA, attorney, broker-dealer, or investment adviser, are the standard ways to meet it. Simply collecting the investor's own statement that they qualify is not reasonable steps under the ordinary 506(c) standard.

The one 2025 exception, stated accurately

On March 12, 2025, in response to a request from the law firm Latham & Watkins, the SEC's Division of Corporation Finance issued a no-action letter addressing exactly this question. The staff said it would not recommend enforcement action if a 506(c) issuer treated a high minimum investment amount as a reasonable step to verify accredited status, relying on the investor's written representations instead of reviewing financial documents — provided several conditions are met:

Primary source: SEC Division of Corporation Finance, Latham & Watkins LLP no-action letter, March 12, 2025 — staff response.

Why it probably does not help you

This is where the popular summary — "the SEC made 506(c) verification easier in 2025" — goes wrong for most sponsors. The relief is gated on those minimums, and typical syndication and fund minimums are $25,000 to $100,000, well below the $200,000 individual and $1,000,000 entity thresholds. If your minimum is under those numbers, the letter simply does not apply to your raise, and you are back to the ordinary 506(c) standard: reasonable steps to verify each investor.

Even where the minimums are met, a no-action letter is SEC staff guidance, not a rule. It reflects only that the staff would not recommend enforcement on the specific facts and representations presented; it can be superseded; and it does not affect state securities laws, non-US law, or CFTC requirements. A Form D filing is still required. Confirm your approach with securities counsel.

What most sponsors do instead

For the great majority of 506(c) raises — the ones with ordinary minimums — verification is still the task, and the cleanest way to handle it is a third-party letter. The investor's documents go to a licensed CPA or attorney; the sponsor receives only a letter confirming accredited status, never the underlying financials. That keeps sensitive documents out of the sponsor's hands and produces a clean, verifiable record for the offering file. That is what AccreditedNow issues, at a published price, with a public certificate a sponsor can check.

Verifying investors for a 506(c) raise?

Give your investors a simple path to a CPA-signed letter, or buy prepaid seat packs so they verify at no cost to them — tracked in your sponsor dashboard.

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Common questions

Can a 506(c) issuer just accept an investor's self-certification?
Generally no. Rule 506(c) requires the issuer to take reasonable steps to verify that each investor is accredited, which is a higher bar than the self-certification permitted under 506(b). The one narrow exception is a March 2025 SEC staff no-action letter that lets an issuer rely on written representations when the investment meets a high minimum — at least $200,000 for individuals and $1,000,000 for entities — and certain other conditions are met.
What did the March 2025 SEC no-action letter actually change?
On March 12, 2025, in response to a request from Latham & Watkins, the SEC staff said it would not recommend enforcement action if a 506(c) issuer treated a high minimum investment as a reasonable step to verify accredited status, relying on the investor's written representations rather than reviewing income or asset documents. The minimums are $200,000 for a natural person and $1,000,000 for a legal entity, the investor must represent both that they are accredited and that the minimum is not financed by a third party for the purpose of the investment, and the issuer must have no actual knowledge to the contrary.
Does the 2025 no-action letter help a typical syndication?
Usually not. Most real estate syndications and funds set minimums of roughly $25,000 to $100,000, well below the $200,000 individual and $1,000,000 entity thresholds the letter requires. Below those minimums, the ordinary 506(c) verification standard still applies, so most sponsors cannot rely on the letter and still need to verify each investor — commonly with a CPA or attorney letter.
Is a no-action letter the same as a rule?
No. A no-action letter is SEC staff guidance, not a rule or law. It states only that the staff would not recommend enforcement on the specific facts and representations presented, it can be superseded, and it does not affect state securities laws, non-US law, or CFTC requirements. A Form D filing is still required. Sponsors should confirm their approach with securities counsel.

This page is general information about Regulation D, not legal advice, and it summarizes a staff no-action letter that rests on specific facts and representations. Confirm how the rules and the letter apply to your offering with your securities counsel. AccreditedNow is not a law firm.