Legal

Compliance

Compliance

See definitions of Business User, End User, End Customer, and others in the Terms of Service Section.

Accredd specializes in verifying the accreditation status for individuals and entities, under the Securities and Exchange Commission Regulation D, Rule 506(c). By performing our Services on behalf of issuers, our Business Users and End Customers, we standardize the verification process and maintain the definition of an accredited investor as set by the Securities and Exchange Commission. We use and expand upon the guidelines set forth by the Securities and Exchange Commission to apply a rigorous and unbiased approach to certifying the accreditation status for individuals and entities.

Rule 506(c) includes a non-exclusive list of verification methods that issuers may use, but are not required to use, to confirm that they satisfy the verification requirement with respect to natural person purchasers. The non-exclusive verification methods are outlined below and any one can be relied on.

  • Verification based on income, by reviewing copies of any Internal Revenue Service form that reports income, such as Form W-2, Form 1099, Schedule K-1 of Form 1065, and a filed Form 1040;
  • Verification based on net worth for individuals or assets for entities, by reviewing specific types of documentation dated within the prior three months, such as bank statements, brokerage statements, certificates of deposit, tax assessments, property deeds and in cases of net worth calculation, a credit report from at least one of the nationwide consumer reporting agencies;
  • A written confirmation from a registered broker-dealer, an SEC-registered investment adviser, a licensed attorney or a certified public accountant stating that such person or entity has taken reasonable steps to verify that the purchaser is an accredited investor within the last three months. The professionals providing this confirmation must be currently licensed and in good standing.
 

As the instructions to Rule 506(c) provide, “These methods are examples of the types of non-exclusive and non-mandatory methods that satisfy the verification requirement in § 230.506(c)(2)(ii).”

Accredd Inc, its staff and its Affiliates, take every reasonable step to verifying investors using the methods outlined and provided by the Securities and Exchange Commission when applicable. There are times when we may perform additional steps to validate the legitimacy of an investor based on the information submitted to us. All financial documents are encrypted, in transit and at rest, and are stored securely on our server for a set period of time. Read more about our Security Protocols here.

As it pertains to verifying the accreditation status for the End User or End Customer, Accredd will take limited and reasonable responsibility for verifying financial documents and granting accreditation to the End User or End Customer. We rely on the End User or End Customer’s certification that they submitted their current and accurate financial documents to Accredd, either directly or through a Business User. Accredd shall not be liable for misrepresentations, altered documents, or false information. In the case of documents prepared by other third parties, such as accreditation letters by licensed attorneys, certified public accountants, registered broker-dealers or investment advisers, or other verifiers,, Accredd shall take reasonable steps to verify the third party’s good standing with respect to its license or registration and other information about the End User or End Customer. By accepting your status as an End User, or End Customer, you acknowledge that the underlying financial proof required to verify one’s status as an “accredited investor” (as defined by U.S. Securities and Exchange Commission Rule 501 under the U.S. Securities Act of 1933), is inaccessible by us, and you confirm that (i) you shall not consider Accredd (including its officers, employees, independent contractors, and agents) to be liable for any acts or omissions with respect to such verification, and (ii) you will not initiate any claim in arbitration or a court of law with respect to Accredd’s acts or omissions. Accordingly, Accredd and its Business Users will not be liable to the third party, the End User, or End Customer.

 

 

Re-Verification

The United States’ Securities and Exchange Commission published updated guidelines that detail a change in the frequency in which issuers filing under 506(c) should re-verify an existing purchaser’s accreditation status. The previous frequency was every 90 days, which caused a lot of redundancy for issuers and investors. The Commission made the change in an effort to encourage issuers to use Rule 506(c) and reduce the friction for purchasers who wished to do a repeat investment with the same issuer. Issuers should check in with the purchaser that nothing has materially changed in their financial situation, but otherwise issuers can rely on the previous verification. Accredd was the first verifier in the industry to embrace and adopt this change in favor of helping issuers and investors move through the 506(c) accreditation process.

Accredd securely stores financial documents for a period of 5-years to prove accreditation verification for each purchaser who uses our Services. This initial 5-year period is referred to as our standard retention policy, and this helps issuers stay compliant with regulations. After the retention period, personal information is automatically set for deletion after 1 additional year, unless otherwise directed or requested. Read more about personal information and how we use it at accredd.com/legal/privacy-policy.