So, of course, securities law practitioners have been anxiously waiting for the SEC to adopt those new rules and clarify what actions an issuer must take to "verify" the accredited investor status of purchasers of its securities in Rule 506 offerings.
On August 29, the SEC proposed amendments to Rule 506 to implement the changes required by the JOBS Act. Those proposed amendments are available here. Under the proposed amendments, the SEC addressed the question of what is required to "verify" accredited investor status by stating that the issuer must "take reasonable steps to verify that purchasers of securities sold in any offering under this § 230.506(c) are accredited investors." The SEC's proposing Release explains that "reasonableness" "would be an objective determination, based on the particular facts and circumstances of each transaction." The determination would include the following factors:
- the nature of the purchaser and the type of accredited investor that the purchaser claims to be;
- the amount and type of information that the issuer has about the purchaser; and
- the nature of the offering, such as the manner in which the purchaser was solicited to participate in the offering, and the terms of the offering, such as a minimum investment amount.