Under Rule 506(c), you cannot just take an investor's word that they are accredited - you must take "reasonable steps" to verify it. This accreditation verification is the price of being allowed to market publicly. In practice you review financial documents, obtain a professional's letter, or use a trusted third-party verifier, then keep records of what you relied on. Doing this properly is essential: weak verification can cost you the 506(c) exemption for the entire raise.

Why verification is required

506(c) grants a powerful privilege - general solicitation, or public marketing. In exchange, the SEC requires more than self-certification: you must reasonably confirm each buyer is a genuine accredited investor.

This is the key difference from 506(b), where investors can self-certify. Public marketing attracts a wider, less-known audience, so the rule demands real evidence of eligibility.

The reasonable-steps standard

The standard is "reasonable steps," judged on the facts - not a single rigid checklist. The SEC provides safe-harbor methods you can rely on, and the higher an investor claims their status, the lighter the steps can sometimes be.

What is never enough is a checkbox. You need actual evidence, appropriate to the investor, that you can point to later if questioned.

What documents count

Common accepted methods include reviewing recent tax returns or W-2s to confirm income; reviewing bank, brokerage, or other statements (plus a credit report) to confirm net worth; or obtaining a written confirmation from the investor's CPA, attorney, registered broker-dealer, or investment adviser.

For income, issuers typically look at the last two years; for net worth, recent statements dated within a few months. The investor's professional letter is often the cleanest route, since it shifts the documentation to a qualified third party.

Entities accredit differently from individuals - common routes are an entity with over $5 million in assets, or one in which all equity owners are themselves accredited - so verifying a fund or LLC means looking through to that test, not just checking a box. There is also a useful shortcut for repeat raises: the SEC provides a method for an "existing accredited investor" you have already verified to simply reconfirm their status in writing for a later offering by the same issuer, within a defined window, rather than re-papering the whole review each time.

Using a third-party verifier

Most tokenized issuers do not handle this manually. Specialized verification services collect the documents, apply the SEC's standards, and issue a confirmation you can rely on - often reusable across deals. This reduces your burden and creates a clean, defensible record.

It also keeps sensitive investor financials out of your own systems, which investors appreciate. Names in this market include Parallel Markets, VerifyInvestor, and the verification built into platforms like iCapital; many issue a confirmation an investor can reuse across deals for a period (commonly treated as good for about 90 days before it must be refreshed). Remember too that the accredited definition widened in 2020 - holders of a Series 7, 65, or 82 licence now qualify on credential alone - so a verifier can sometimes confirm status from a licence lookup rather than financial statements. For most 506(c) raises, a reputable verifier is the pragmatic choice.

Keep the records

Whatever method you use, document it: what you reviewed or relied on, when, and the conclusion. These records are your evidence that you met the reasonable-steps standard, and they matter if the offering is ever examined. Note that accreditation verification is separate from ordinary identity checks - investors still complete KYC too, as shown in how investors pass KYC.

Where to go next

• Next: MiCA vs SEC for RWA issuers.
• The investor's KYC: how investors pass KYC.
• Glossary: accreditation verification.

Sources: U.S. SEC (sec.gov), as of 2026.