506(c) Fund Launch: Verification & Compliance Essentials

This collection centers on accredited investor verification requirements for Rule 506(c) offerings—the regulatory pathway that permits general solicitation but mandates rigorous investor verification.

Key Insights

Regulatory Framework: Latham & Watkins' interpretive guidance letter reveals that issuers can satisfy "reasonable steps" verification through minimum investment thresholds ($200K for individuals, $1M for entities) combined with written representations—offering a practical bright-line standard beyond document review.

Market Solutions: Multiple verification platforms (Accredd, VerifyInvestor, InvestReady, Opera IQ) provide automated, API-integrated services that:

• Complete verifications in under 12 hours
• Issue 5-year validity letters
• Include KYC/AML compliance
• Maintain 256-bit encryption for sensitive data

Strategic Takeaway: The verification requirement—initially seen as a 506(c) barrier—has spawned a mature service ecosystem that makes compliance straightforward and scalable. The Latham letter suggests regulators may accept investment minimums as verification proxies, potentially simplifying future offerings.

For stakeholders: This represents a clear path to compliant capital raising with established tools and emerging regulatory flexibility around verification methods.