How long a third-party verification letter stays good. Most raises run longer than that, which means the investors who committed first are the ones whose paperwork has gone stale by the time you close — discovered, usually, in the week you are trying to close.
Rule 506(c)(2)(ii) · Regulation D · As amended by JOBS Act 2012506(c) is the exemption that lets you advertise your raise to the world. The price of admission is that self-certification is no longer enough — and the verification step is where most first-time 506(c) issuers lose weeks they did not budget.
Under Rule 506(b), an investor ticks a box saying they are accredited and, absent anything telling you otherwise, that is the end of it. Under Rule 506(c), a ticked box is not enough. The issuer must take reasonable steps to verify that every purchaser is in fact accredited, and the burden sits with the issuer — not the investor, not the platform, not the lawyer who drafted the subscription agreement.
That single obligation is the reason a lot of raises that should be 506(c) end up as 506(b). Founders hear “we will need your tax returns”, imagine the conversation with a family-office principal, and quietly choose the exemption that avoids it. That instinct was more justified before 2025 than it is now, and this piece is mostly about why.
If you have not yet chosen between the two exemptions, start with 506(b) vs 506(c) — this article assumes the choice is made and you are on the 506(c) side of it.
Before verifying anything you need the thing being verified. For individuals, the two common tests are unchanged and have been since 1982:
Those dollar thresholds have never been indexed to inflation — $200,000 in 1982 was a far smaller pool than $200,000 today, which is why the accredited population keeps growing without anyone changing the rule. The INVEST Act, which passed the House in December 2025 and sits with the Senate, would direct the SEC to index the thresholds and add licence-, education- and experience-based pathways. It is not law. Do not structure a raise around it, but know it is moving.
Rule 506(c)(2)(ii) gives a non-exclusive list of methods. Non-exclusive matters: these are safe harbours, not the only permitted approaches. In practice issuers use one of four.
“Route 4 is the one that changed the calculus. If your minimum check is $200,000 anyway, verification stopped being a reason to avoid 506(c).”
That last route deserves emphasis because of what it removes. The historical argument against 506(c) was never legal — it was social. Nobody wanted to ask a serious investor for their tax returns. For offerings whose minimum check size already clears those thresholds, that conversation is now largely replaced by a certification, and the practical gap between the two exemptions narrowed considerably.
Third-party verification confirms status within the prior three months. A raise that opens in March and closes in September has a problem: the investors who committed earliest — usually your most enthusiastic, most connected, most anchor-like investors — have verification that has expired by the time you get to the final close.
The failure mode is predictable and entirely avoidable. Counsel reviews the closing checklist, finds four letters dated more than three months ago, and the close slips two weeks while someone chases four busy people for refreshed confirmations from their own accountants. Nobody did anything wrong. The calendar just was not in the model.
If your raise is likely to run past 90 days — and most do — decide at the outset how re-verification will work. Either stagger closings so each one sits inside the window for its own investors, or tell early investors upfront that a short refresh will be needed at final close. A warning given in month one is administrative. The same request made in closing week reads as disorganisation.
Verification is a legal requirement that lands as a customer-experience problem. The investor has just decided to back you. The next thing you send them is a request for financial documentation. How that request is framed does real damage or none at all.
“Four routes, one 90-day clock, and one 2025 letter that made the whole thing easier for anyone raising at a serious minimum check size.”
One point that should not need saying and unfortunately does: verification is not a formality you can delegate away entirely. Using a verification service or a platform does not transfer the obligation off the issuer. It industrialises the work and creates the record. The responsibility for having taken reasonable steps stays where the rule puts it.
Dealithic builds the offering, the documents and the investor pipeline in one place.
PPM, subscription agreement and Form D for 506(b) or 506(c), an offering microsite, and matching to funds and accredited investors on your actual terms — with the verification step tracked per investor instead of living in someone's inbox. Start free.
Start Free →General information about a securities rule, current as of September 2026. Not legal advice, and no attorney-client relationship is created by reading it. No-action letters bind nobody but their requester, the rules change, and your facts matter. Confirm anything here with your own counsel.
“506(c) trades a paperwork obligation for an investor pool two orders of magnitude larger. Since 2025 the paperwork has been the smaller half of that trade for anyone raising at a serious minimum.”
Name the step early. Watch the ninety days.