SIFMA Issues Guidance on Rule 506(c) Verification

SIFMA issued guidance to registered broker-dealers and investment advisers on verification methods that they could use to comply with the requirements of the safe-harbor method of accredited investor verification permitted by Rule 506 under the Securities Act.

The guidance is intended to help members apply the "reasonable verification" requirement in Rule 506(c) ("Exemption for Limited Offers and Sales without Regard to Dollar Amount of Offering") offerings in three situations:

• registered broker-dealers and investment advisers verifying natural persons as accredited investors based on the value of their known cash and marketable securities;
• registered broker-dealers and investment advisers verifying natural persons as accredited investors based on the amount of their proposed investments in the Rule 506(c) offering; and
• any persons verifying legal entities as accredited investors.

See: SIFMA Guidance.See also: SEC Amends Private Placement Rules.