Investor Accreditation

Why Verify Accredited Investors?

The legalization of General Solicitation of private investment through SEC’s Regulation D, Rule 506(c) has created opportunities for investors and entrepreneurs to connect in a more open and transparent fashion than ever before.  What has been historically not possible, is now possible as long as . Issuers of publicly sold, private securities and security token sales (STO’s) must now take “reasonable steps” to verify that all investors in their company qualify as Accredited. Self-certification of being an Accredited Investor is not sufficient when investing in publicly solicited private securities. But now through CrowdEngine, Regulation D, 506(c) investors can be verified as Accredited with our simple online solution.

CrowdEngine offers affordable, professional verification services for investors looking to prove their accredited investor status. Under securities laws, certain types of investments, such as generally solicited Reg D, Rule 506(c) offerings, are only available to accredited investors. With CrowdEngine, you can obtain self-verification quickly, confidentially, and cost-effectively.

How Do I Qualify as an Accredited Investor?

Accredited investor verification requires investors to demonstrate a certain level of financial security which would  allow them to absorb economic risks involved with unregistered securities. The first step is for the individual or entity to prove their wealth by verifying the various sources or varieties of qualifying financial holdings.

In the case of an individual an accredited investor must have an annual income that exceeded $200,000 (or $300,000 together with a spouse) in each of the prior two years and reasonably expect the same for the current year. An individual also qualifies as an accredited investor if they have a net worth over $1 million, either alone or together with a spouse, excluding the value of the person’s primary residence.

It should be noted that a qualified investor must satisfy the requirements for three consecutive years either alone or with a spouse. Qualified investors cannot satisfy the requirements one year based on individual income and the next two years based on joint income with a spouse unless the individual is married within that period.

What Does the SEC Require?

The SEC offers a non-exclusive list of verification methods that issuers may use, but are not required to use.  This non-exclusive list of methods includes the issuer taking “Reasonable Steps”  to verify an accredited investor. By taking “reasonable steps”, issuers can be confident in complying with the Regulation.

These reasonable steps can include:

  • Verification based on income
  • Verification based on net worth
  • ​Verification of a letter from a CPA, attorney, or broker

CrowdEngine can provide the “reasonable steps” listed above for the issuer to comply with Reg D 506(c).  Contact us to learn more.