How to sort accredited investors when you run a Reg CF and a 506(c)

When a company runs a Reg CF offering and a Rule 506(c) offering at the same time, it has to know which investors are accredited. That record decides which offering a person can buy into, and so which materials you walk them through. In practice it takes three steps: ask early and tag the answer, send each person to the right offering, and verify accredited status before any 506(c) sale. Self-reporting is enough to sort people. It is not enough to sell to them.

This post is about how to build that. Whether you should run both offerings at all is covered in running a Reg CF and a 506(c) side by side.

Why accredited status decides what you show someone

Two rules do the work.

A 506(c) can only sell to accredited investors, and you have to check. Anyone can see a 506(c) ad, because the offering allows general solicitation. But every buyer must be accredited, and the company "shall take reasonable steps to verify" that they are (17 CFR 230.506(c)(2)). A checkbox on a form does not meet that standard.

Each offering's materials can pull in the other offering's rules. When two concurrent offerings both allow general solicitation, materials for one that include "information about the material terms" of the other may count as an offer in that other offering. They then have to follow its rules, including its legends and communication limits (17 CFR 230.152(a)(2)). For Reg CF, that means the advertising limits in 17 CFR 227.204. Off the funding portal, an ad that gives the terms may include only a notice of the offering, the portal's name and a link to it, the terms, and basic facts about the company.

Put together: your detailed 506(c) deal room is for people you have reason to believe are accredited, and it should not go into the details of the Reg CF terms. The detailed Reg CF content lives on the portal.

Nobody is shut out. Accredited investors can invest in the Reg CF too, and the per-investor limits apply only to investors who are not accredited (17 CFR 227.100(a)(2)).

Why the Reg D should usually be a 506(c), not a 506(b)

A 506(b) does not allow general solicitation. When it runs alongside an offering that does, the company needs a reasonable belief, for each 506(b) buyer, that it either did not reach them through general solicitation or had a substantive relationship with them before the 506(b) began (17 CFR 230.152(a)(1)). Anyone who came in through your Reg CF ads is hard to fit into that. A 506(c) avoids the problem because it allows general solicitation too, which is why it is the usual pairing.

Step 1: Ask early and tag the answer

Put one question near the start of your funnel, in the investor form on your site or on the first call: does this person meet one of the accredited investor tests? The SEC's accredited investor page lists them. Store the answer as a property on the contact in your CRM.

Name that property for what it is: a self-report. It is a routing signal, not a verification, and the CRM should never let anyone mistake one for the other. See the CRM and email system for a raise for where it fits.

Step 2: Send each person to the right offering

• Not accredited, or not sure: send them to the Reg CF offering on the portal. Ads, emails, and texts that mention the Reg CF terms stay inside the Rule 204 limits and link to the portal.
• Says they are accredited: offer the 506(c) path. That is the deal room, a call, and the subscription documents. Many will still choose the Reg CF. That is fine.

The 506(c) materials sit behind that step, not on the public site. Keep them about the 506(c). If they need to mention the Reg CF, have counsel decide how, because describing its material terms brings in the Reg CF rules.

Step 3: Verify before any 506(c) money is accepted

The rule lists methods that count as reasonable steps for a person, as long as the company does not know the buyer is not accredited (17 CFR 230.506(c)(2)(ii)):

• Income: review IRS forms reporting the buyer's income for the two most recent years, such as a W-2, 1099, K-1, or 1040, plus a written statement that they expect to qualify this year.
• Net worth: review statements from the past three months, such as bank or brokerage statements, and a consumer credit report for liabilities, plus a written statement that all liabilities have been disclosed.
• A third party's confirmation: a written confirmation, from the past three months, from a registered broker-dealer, an SEC-registered investment adviser, a licensed attorney, or a CPA that they verified the buyer. Most verification services work this way.
• An earlier verification: if the company verified the same person within the past five years, a new written statement from them at the time of sale is enough.

These methods are not the only way. The rule calls them "non-exclusive and non-mandatory." In March 2025, SEC staff agreed that a high minimum investment can count. The minimum is at least $200,000 for an individual or $1,000,000 for an entity. It must come with written statements that the buyer is accredited and that the investment is not financed by a third party for that purpose, and the company must have no knowledge to the contrary (SEC staff letter to Latham & Watkins, March 12, 2025). That is staff guidance tied to the facts in the request, not a rule change. If your 506(c) already has a large minimum, ask counsel whether it fits. It removes the most friction from the funnel.

Step 4: Keep the evidence

For every 506(c) buyer, keep the method used, the documents or the confirmation letter, the written statements, and the date. Update the CRM property from "self-reported" to "verified," with the date and method. If the SEC asks, the company has to show the reasonable steps it took for each buyer.

Step 5: File for both offerings

The Reg CF files its Form C and the reports that follow, covered in what EDGAR is and who uses it. The 506(c) files a Form D no later than 15 calendar days after the first sale (17 CFR 230.503(a)), with the 506(c) box checked.

What to measure

Treat verification as a step in the funnel, with its own drop-off. Track the people who said they were accredited, those offered the 506(c), those who started verification, those verified, and those who invested. A slow verification step loses investors who were ready to write the largest checks, so decide who follows up on stalled verifications before you launch.

This post is general information, not legal advice. How your offerings are structured and how each one is mentioned is for your securities counsel.

FAQ

Is self-certification enough to sell in a 506(c) offering?

No. Rule 506(c) requires reasonable steps to verify that each buyer is accredited. A self-report is useful for routing people, but on its own it does not count as verification.

Can an accredited investor invest in the Reg CF instead?

Yes. Reg CF's per-investor limits apply only to investors who are not accredited, under 17 CFR 227.100(a)(2). An accredited investor can pick either offering.

Can my 506(c) materials describe the Reg CF offering?

Carefully. Under Rule 152(a)(2), materials that include the material terms of the Reg CF may count as a Reg CF offer and must follow its rules, including the advertising limits in Rule 204. Have counsel approve the wording.

Does a high minimum investment replace verification?

It can count as a reasonable step. SEC staff accepted a $200,000 minimum for individuals and $1,000,000 for entities, with written statements and no contrary knowledge, in a March 2025 no-action letter. It is staff guidance on specific facts, so confirm it fits your offering.

How long does an accredited verification last?

Under Rule 506(c)(2)(ii)(E), if the company verified someone before, a new written statement from them satisfies verification for five years from the earlier verification, unless the company learns otherwise.