Can You Skip Third-Party Verification? The SEC’s No-Action Letter Explained
Written for investors, issuers, and portals. Updated on May 27, 2025
On March 12, 2025, the SEC shared two updates. These changes affect how we check accredited investors under Regulation D Rule 506(c). The SEC’s No-Action Letter explains these changes. This will help issuers verify investors more easily, and possibly lead to an increase in 506(c) offerings.
The key update:
- Minimum Investment – The SEC states that it may be reasonable for issuers to take fewer steps to verify or, in certain cases, no additional steps to verify accredited investor status based on a minimum investment amount. This is $200,000 for individuals and $1 million for entities. Investors must also provide supporting representations.
These changes might lessen the need for third-party verification. But, they also raise concerns about compliance, risk, and issuer responsibility.
How These Changes Affect Third-Party Verification
1. Issuers May Depend Less on Third-Party Services
Issuers now have more flexibility when dealing with investors with a high investment amount. Some may decide to verify investors themselves if they gather the correct supporting representations required by the SEC.
Before skipping third-party verification, issuers should:
- Consider how well they know the investor.
- Check if the investment meets the SEC’s minimum requirement.
Issuers should use a third-party service like Accredd. This is important if they don’t know the investor or if the investment amount is below the SEC’s no-action letter guidance.
2. More Risk for Issuers Doing Their Own Verification
With great power comes great responsibility. If an investor lies and the issuer fails to verify, the issuer may face SEC penalties, not the investor.
To reduce this risk, issuers should:
- Determine if they have enough knowledge to trust self-certification.
- Use third-party verification if they are unsure.
- Understand the full scope of what’s required to verify investors under SEC rules, covered fully in our accredited investor verification guide for issuers.
3. Third-Party Services Must Adapt
To stay useful, third-party verification providers should:
- Offer better compliance tools to help issuers keep proper records.
- Provide automated verification to improve speed and accuracy.
- Offer ongoing investor checks to ensure compliance over time.
- Handle edge cases and exceptions with a detailed review.
- Allow for quick turnaround times to support time-sensitive capital raises without compromising compliance.
4. Third-Party Verification Still Helps Reduce Risk
Even with these new options, third-party verification is still valuable. Many issuers don’t have the time, expertise, or procedures to handle compliance on their own. Third-party services provide an extra layer of security while offloading compliance.
A trusted verification service makes a clear record. This helps protect issuers during SEC investigations.
The Future of Third-Party Verification
As the SEC rules change through actions like the no-action letter, third-party services should:
✓ Automate to spot compliance risks.
✓ Help issuers document their verification process.
✓ Integrate verification services into issuer fundraising platforms.
✓ Encourage issuers to do a pre-check by:
- Evaluating how well they know the investor.
- Checking the investor’s investment amount.
- Deciding if self-certification is safe or if third-party verification is needed.
Where Accredd Fits In
Accredd remains a trusted and modern verification provider, ensuring compliance through SEC-approved methods, while offering unmatched speed, transparency, and support. While the SEC now allows issuers more flexibility under the no-action letter, Accredd continues to streamline the verification process by offering:
- 12-Hour Turnaround – Most verifications are completed within 12 hours, helping issuers meet tight fundraising deadlines without sacrificing compliance.
- 1 Business Day Customer Support Guarantee – Issuers and investors get prompt, U.S.-based support from a real team, not a bot or ticket queue.
- Detailed Investor Feedback – Accredd doesn’t just say “yes” or “no.” Investors receive clear, actionable guidance if something is missing or incorrect in their documentation, reducing back-and-forth and frustration.
- Multiple Verification Options – Accredd supports:
- Tax Return & Income Verification – Secure and accurate analysis of W-2s, 1099s, or tax transcripts.
- Net Worth Verification – Comprehensive review of brokerage statements, bank accounts, and liabilities.
- Third-Party Attestations – CPA, attorney, or licensed advisor letters for added validation and flexibility.
- White-Label Capability – Accredd can operate seamlessly in the background of investor portals and fundraising platforms, keeping the sponsor’s brand front and center.
- Secure, Compliant Records – Issuers receive robust documentation of each verification, supporting due diligence and audit readiness.
Pre-Check Before Using Accredd
Before referring investors to Accredd, issuers should:
- Assess how well they know the investor’s financial background.
- Check if the investor’s investment meets the SEC’s $200K (individual) or $1M (entity) guidance.
- Consider using Accredd if there is any uncertainty or if the investor falls below the threshold.
Even in cases where self-verification is legally allowed, Accredd helps issuers offload verification tasks and reduce liability, while still keeping the process fast and frictionless.
Conclusion
The SEC’s 2025 no-action letter gives the option to issuers to bypass verifications for large investors. But it can also raise compliance risks. Before deciding on self-verification, issuers should make sure they know their investors completely.
Third-party verification is still an important tool for reducing risk and ensuring compliance. Accredd helps issuers verify investors with confidence while avoiding regulatory penalties.
