Verifying Accredited Investor Status in a General-Solicitation Private Placement
Chapters in this video
- 0:00 Tale of Riley the Rep: setting up the verification trap
- 0:52 Core duty: reasonable steps vs. reasonable belief
- 1:27 The sparkly napkin self-certification exam trap
- 2:04 Five non-exclusive verification methods overview
- 3:08 Three big numbers: two-year IRS forms and three-month document rule
- 4:35 Five-year prior verification window and its fatal trap
- 5:47 When methods fail: actual knowledge destroys safe harbor
- 7:03 Rapid-fire exam recap
What this video covers
- The difference between reasonable belief in a no-solicitation private placement and the mandatory reasonable steps duty in a general-solicitation private placement
- Why a bare, unverified self-certification from an investor never satisfies the verification requirement in a general-solicitation private placement
- The five non-exclusive methods the Securities and Exchange Commission (SEC) provides as deemed compliance for natural persons: income basis, net worth basis, third-party written confirmation, grandfathered certification, and prior verification on file
- The two-year Internal Revenue Service (IRS) form requirement for income-based verification plus the current-year expectation representation
- The three-month dating rule for net worth documents, consumer reports from nationwide credit reporting agencies, and third-party written confirmations
- The five-year reliance window for prior verifications on file, and why it runs from the original verification date not the current sale date
- How actual knowledge that an investor is not accredited overrides even a properly executed safe-harbor method
Read the full lesson, free
This video's complete written lesson is free to read in the CertFuel app, no signup wall. The complete Series 82 course also includes adaptive practice questions and spaced-repetition flashcards, available in Free Beta.