Series 82: 2.1.1.2. Verification Of Accredited Investors And QIBs

2.1.1.2. Verification of Accredited Investors and QIBs

The SEC requires an issuer of a Reg D, Rule 506 private placement to take reasonable steps to verify that the purchasers are accredited investors. Verification is usually done through a questionnaire, plus additional supporting documents. While the issuer is required to do this, the principal of the placement agent or investment banking firm must keep records of these verification documents. In addition, the SEC suggests one of the following methods (but none of these methods is required):

• Verification based on income can be accomplished by reviewing copies of any IRS forms that report income, such as Form W-2, Form 1099, Schedule K-1 of Form 1065, and a filed Form 1040, and a representation from the purchaser that he expects to continue to make this amount in the future.

• Verification based on net worth can be achieved by reviewing specific types of documentation dated within the prior three months, such as bank statements, brokerage statements, certificate