Series 79 practice questionmediumRegulation D
Which of the following would constitute acceptable verification of accredited investor status under Rule 506(c)?
- AA simple checkbox on the subscription agreement where the investor self-certifies
- BChecking that the investor has a brokerage account
- CA verbal confirmation from the investor during a phone call
- DReview two years of tax returns plus current-year income representation✓ Correct answer
Explanation
Why D — Review two years of tax returns plus current-year income representation
Rule 506(c) requires issuers to take 'reasonable steps' to verify accredited investor status. The SEC has provided non-exclusive examples of acceptable verification methods, including reviewing IRS forms (W-2, tax returns) for income-based qualification, obtaining written confirmation from a registered broker-dealer, investment adviser, or CPA, or reviewing bank and brokerage statements for the net worth test. Simple self-certification, which is sufficient under Rule 506(b), is not adequate for Rule 506(c) verification.
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