Accredited Investor Verification and Other Methods to Access New Opportunities

Qualifying as an accredited investor can certainly open up to you previously untapped opportunities. There are four ways for natural persons to become verified as an accredited investor. Note that verification is an extra step beyond the accredited investor self-certification which has historically been acceptable for other deals. These methods are as follows:

The Income Method

As an investor, you can prove that you are accredited by demonstrating you’re a natural person with income greater than $200,000 in each of the past two years or joint income with a spouse exceeding $300,000 for those years and with a reasonable expectation to match the same income level in the current year. In essence, through accredited investor verification via the income method, you can qualify your status as an accredited investor.

The Net Worth Method

You may also prove that you are an accredited investor if you are a natural person with an individual net worth, or joint net worth with the spouse greater, than $1 million. You must disclose your assets in order to properly calculate net worth. However, the value of the investor’s primary residence is not to be counted toward net worth for the purposes of verification. Debt accumulated in the previous 60 days against the primary residence as well as debt greater than the value of the primary residence is to be deducted from net worth for the purposes of determining accredited investor verification.

The Insider Method

An investor is accredited if he or she is an executive officer, director, or general partner of the issuer of the securities sold or offered, or an executive officer, director or general partner of a general partner of the issuer. Evidence to support this position may include certifications, resolutions, or other governing documents. Publicly available evidence may also be available such as research reports, security filings, or other reliable third-party sourced information.

The Professional Letter Method

An investor seeking to gain accredited investor status, may require a written confirmation from various sources, including a certified public accountant, licensed attorney, investment advisor registered with the SEC, or a registered broker-dealer. Any of the aforementioned persons must be in good standing under the laws of the jurisdiction in which he or she is permitted to practice law (in the case of the attorney), or properly certified or registered under the laws of the place of their residence or principal office. The written confirmation letter must verify that reasonable steps had been taken to verify the accredited investor status of the investor within the previous three months and that it has been determined that the investor meets accredited status.

Whether an accredited investor self certification method is employed or some other method, excellent opportunities await for those who are able to meet the qualifications of an accredited investor.

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