PubLedge

An issuer conducting a Rule 506(c) offering satisfies the "reasonable steps to verify" accredited-investor requirement when it (1) imposes a minimum investment amount high enough that only accredited investors would reasonably be expected to meet it, (2) obtains written representations of accredited status and that the investment is not financed by a third party for purposes of the investment, and (3) has no actual knowledge of contradictory facts. The position restates the principles-based standard; it does not create an exclusive verification method.

What Counts

• High minimum investment amount ($200,000 natural person / $1,000,000 entity as illustrative benchmarks)
• Written representation of accredited status from the purchaser
• Written representation that funds are not borrowed or provided by a third party for the investment
• Issuer has no actual knowledge of facts indicating non-accredited status
• Facts-and-circumstances alignment with the position as presented

What Does Not Count

• Material deviation from the represented facts (voids reliance)
• Use as an exclusive safe harbor to the exclusion of other §230.506(c)(2)(ii) methods
• Reliance where the issuer has actual knowledge contradicting the representation
• Reliance where a third party funds the investment specifically for the purpose of investing

Implementing Legal Instruments