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Protecting Investors’ Confidential Information during Verification

Mihir Gandhi

The U.S. Securities and Exchange Commission (SEC) requirement that investors, in certain types of securities offerings, be accredited is a tool in the SEC's investor protection toolkit. The verification process requires the sharing and review of certain personal and financial information that must be kept confidential and secure.

Assessing Financial Sophistication

In general, individual accredited investors are those deemed to have:

  • Annual income of more than $200,000, or $300,000 combined with spouse, or
  • $1 million or more of net worth

There are also many categories for entities, such as trusts, banks, employment benefit plans, or companies.

What Information is Required

Investors looking to verify their accredited status may need to provide some of the following:

  • Income documentation such as 1099, K1 or W2 that will support your annual income claims
  • Disclosure of liabilities, including a consumer credit report
  • Details of assets, which may include officer's certificates and third-party valuations, and

How Investor Information is Protected

Before you proceed with engaging a third-party to verify your accredited investor status, ask how they protect your personal information. At VerifyInvestor.com, for example, three approaches help ensure the security of investor information:

  1. Robust security protocols:
    • A comprehensive firewall system, which prevent external networks and some internal connection from obtaining access. The default is to permit no one access, unless and until such access is required by the verification process for that investor.
    • Daily scanning for malware or other vulnerabilities. At VerifyInvestor.com, this process is provided by Symantec.
    • 128/256-bit data encryption that scrambles your personal information to make it inaccessible to any potential hackers, and
    • Extended Validation SSL. Secure Socket Layer certificates offer a trusted system of validation that means we must certify that we are who we say we are.
  2. Option to hide certain information before sharing: investors are able to obscure information that is personally identifiable before they upload. If reviewers require access to what was hidden they must ask for clarification.
  3. Reviews are conducted by a licensed attorney only: licensed attorneys are professionally and ethically bound to maintain confidentiality.

In addition, VerifyInvestor.com takes other steps to help protect the privacy and security of their users. Your personal information deserves to be safeguarded at every step of the accredited investor verification process. It is worth your time to ensure your verification services provider is using the most robust security methods available.

Contact VerifyInvestor.com for more information on how to obtain your own accredited investor verification.

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