SEC issues guidance on verifying accredited investors in public offerings

2, 2025, the SEC issued guidance on accredited investor verification in General Solicitation Securities offerings. This guidance came in the form of a staff no-action letter under Rule 506(c) of Regulation D. The primary significance of this letter is the allowance for companies to raise capital without the need for independent verification of the purchaser’s accredited investor status.

One major impact of this no-action letter is the relaxation of requirements for public marketing of exempt offerings. Companies can now engage in such marketing without the burdensome task of verifying investor wealth or income. This change streamlines the process for companies seeking to raise capital through securities offerings.

It is important to note that while this guidance simplifies the process for companies, it also comes with certain limitations. For instance, fewer state exemptions are available for Rule 506(c) offerings. States have the authority to enforce late filing fees or even consent orders for tardy filings, adding a layer of compliance complexity for companies navigating these regulations.

Overall, the SEC’s guidance on accredited investor verification represents a significant development in the world of securities offerings. By providing more flexibility for companies to raise capital through exempt offerings, the SEC is facilitating innovation and growth in the marketplace. However, companies must be mindful of state-specific regulations and compliance requirements to ensure a smooth and successful fundraising process.