Accredited Investor Verification: What the SEC’s Proposed Expansion Would Mean for Private Markets
VerifyInvestor.com
The SEC is considering broader accredited investor eligibility. For issuers using Rule 506(c), more qualifying investors would still mean taking reasonable steps to verify each investor’s status.
On September 30, the Securities and Exchange Commission (SEC) announced proposals to expand access to private markets. Separately, the commission sought public comment on broadening accredited investor eligibility to include additional professional credentials and a potential FINRA-developed exam, allowing individuals to qualify based on financial sophistication, rather than income or net worth.
Historically, individuals have generally qualified as accredited investors by meeting income or net worth thresholds. In 2020, the SEC expanded eligibility to include individuals holding certain professional credentials. The changes now under consideration would build on that approach, placing greater emphasis on financial knowledge as an alternative basis for qualification.
The potential expansion would not change Rule 506(c)’s verification requirements. If adopted, it would broaden who can qualify as an accredited investor, while issuers conducting Rule 506(c) offerings would still need to take reasonable steps to verify that each investor meets the applicable criteria.
What the SEC Did on September 30, 2026
The first is a set of notices under Rule 501(a)(10), asking for comment on whether the following should qualify a natural person as an accredited investor:
A U.S. Certified Public Accountant license
The Chartered Financial Analyst charter
The Certified Financial Planner certification
The FINRA Series 79 investment banking representative license
The FINRA Series 86 and 87 research analyst licenses
There is also a sixth idea in the notices: an accredited investor examination that FINRA would build, open to anyone over 18, covering general securities and investing knowledge, including exempt offerings under Regulation D. Passing the test would make a person an accredited investor for 10 years.
For now, the accredited investor definition remains unchanged. Even if it does, verification requirements still apply.
Rule 501(a)(10) has been on the books since 2020 and already lets the Commission designate qualifying credentials by order, provided it gives notice and takes comment first. That is the step we are at. Sixty days from Federal Register publication, the Commission decides whether to issue final orders. Until it does, the designated credentials are Series 7, Series 65, and Series 82, and nothing else.
SEC Commissioner Hester Peirce put the reasoning plainly: "Wealth and income are not always great proxies for an investor's sophistication." She also raised a practical question for issuers: how should they assess an investor’s eligibility if a qualifying credential lapses or an exam qualification expires?
Credential-Based Eligibility Since 2020
Since 2020, individuals holding a Series 7, Series 65, or Series 82 in good standing have qualified as accredited investors without needing to meet income or net worth thresholds.
Six years later, most subscription documents still do not list this option. That limited recognition is reflected in VerifyInvestor’s own records: credential-based verification requests remain a relatively small share of the queue.
The SEC’s latest initiative could change that scale considerably. If the additional credentials are approved, hundreds of thousands of CPAs, CFA charterholders and CFP certificants could become eligible. A new examination could extend eligibility further, including to individuals who do not hold a professional credential. What has been a relatively uncommon verification request could become a much more routine part of investor onboarding.
Rule 501(a) Says Who Qualifies. Rule 506(c) Says How You Prove It.
Broader eligibility does not reduce the verification burden.
Rule 506(c) lets an issuer generally solicit. In exchange, the issuer has to take reasonable steps to verify that every investor is accredited. That obligation sits with the issuer. It does not get easier because more people qualify, and the investor's own representation does not discharge it.
The standard is principles-based and assessed objectively on the facts. The SEC points to three things: who the investor is and which category of accredited status they are claiming, what the issuer already knows about them, and the shape of the offering itself, including how it was marketed and whether there is a minimum investment.
The basis on which an investor claims accredited status directly affects what verification is reasonable. Verifying a professional credential requires different evidence and checks from verifying income or net worth.
The safe harbors assume documents
Rule 506(c)(2)(ii) provides several non-exclusive verification methods for natural persons. Other documentation may also support verification under the principles-based standard. Common approaches include:
Income. Review IRS forms for the two most recent years (W-2, 1099, Schedule K-1, Form 1040), plus a written representation that the investor expects to reach the required level in the current year.
Net worth. Review asset documentation dated within the prior three months together with a consumer report from a nationwide consumer reporting agency, plus a written representation that all liabilities have been disclosed.
Third-party written confirmation. Written confirmation from a registered broker-dealer, an SEC-registered investment adviser, a licensed attorney, or a certified public accountant that the professional took reasonable steps to verify and determined the investor is accredited within the prior three months.
Knowledgeable employee or qualifying insider status. An incumbency certificate or officer’s certificate may help establish the investor’s qualifying role. Verification follows the principles-based standard rather than an expressly listed method under Rule 506(c)(2)(ii).
Income and net worth verification rely on financial records. Third-party written confirmation can also support credential-based qualification, but the professional providing it must still take reasonable steps to verify that the investor holds the qualifying credential in good standing.
Credential-based verification can therefore use third-party written confirmation or follow the principles-based standard directly. The rule’s verification methods are non-exclusive, but issuers still need a documented basis for concluding that the steps taken were reasonable.
What a Credential File Needs
Checking a license may take a minute. Building a verification file that holds up to later scrutiny takes more. The file needs to show whose credential was checked, and what was confirmed at the time. Three years later, “we looked it up” will not tell the whole story.
Four things.
Identity. Confirm the investor is the person the credential belongs to. A license number typed into a form proves nothing about who typed it.
Status, from the registry itself. Not a certificate, not a PDF the investor emailed over, not a line on a resume. FINRA licenses are checkable through BrokerCheck. CPA licenses sit with state boards of accountancy. The CFA charter and the CFP certification are verified through CFA Institute and the CFP Board.
Good standing, as of a date. The condition is present tense. Record when the registry was checked and what it returned, because "he was a CPA" is not the test and never was.
Nothing to the contrary. Document that the issuer knows nothing inconsistent with the claim. This condition appears in almost every piece of Reg D verification guidance, and it does real work.
Where it goes wrong
Passing an exam is not holding a license. Someone who sat the Series 7 in 2011 and left the industry in 2014 does not hold it in good standing. People conflate the two constantly, usually in good faith.
"Inactive" is not obviously "good standing." Many state accountancy boards maintain inactive, retired, and lapsed categories, each meaning something slightly different. A CPA who has stopped practising but keeps the license current is a genuinely arguable case, and arguable cases belong in a documented file rather than in someone's head.
Credentials expire. Verifications already did. Prior verification runs out after five years. An examination route with its own validity period puts a second clock on the same investor, running on a different schedule.
The pathway is for natural persons. An LLC or a trust subscribing on behalf of a credentialed individual is a different analysis, not a shortcut through the individual's license.
What Nobody Knows Yet
The notices open the discussion. They leave several practical questions unanswered.
It is not clear how "good standing" will be defined for credentials outside FINRA's system. CFA Institute, the CFP Board, and roughly fifty state accountancy boards each maintain their own statuses, lapse and reinstatement rules, and lookup tools. Some of those tools are good. Some are not.
It is also unclear how an examination result would be evidenced. A pass is not a license, and no registry of passes exists today.
And the Commission may not adopt any of it. These are notices contemplating orders. Sixty days of comment, then a decision.
We intend to file a comment.
Tokenized Offerings and On-Chain Attestations
Two pieces of SEC staff guidance now sit alongside the enumerated methods. Both are staff interpretive positions rather than rule changes, which matters when you are describing them.
On March 12, 2025, the Division of Corporation Finance issued a no-action letter creating a minimum investment pathway. Where an issuer sets a minimum of at least $200,000 for a natural person or $1,000,000 for a legal entity, obtains written representations that the purchaser is accredited and is not financing the minimum through a third party, and has no actual knowledge to the contrary, the staff said it would not recommend enforcement action for failure to take reasonable steps.
On July 21, 2026, the staff extended that position to tokenized offerings. Question 260.40 of the Securities Act Rules Compliance and Disclosure Interpretations confirms that those written representations "may be obtained through a tokenized security using a digital attestation," provided the issuer retains sufficient records of the process used through the token standard protocol. The objective standard survives intact: whether reasonable steps were taken is still a facts-and-circumstances determination.
Narrow, but useful. It answers how a representation may be delivered, not what must be established, and it does not reach secondary transfers. For anyone building a tokenized private placement, an on-chain investor credential can carry real compliance weight provided the record behind it is complete.
Demand is ahead of understanding, incidentally. In the VerifyInvestor 2026 Accredited Investor Outlook, drawn from more than 200 verified accredited investors surveyed in April 2026, 27% expressed interest in digital asset securities while only 11% called themselves very familiar with them.
One Threshold That Already Moved
For a Section 3(c)(7) fund or an offering carrying performance fees, accredited status is only the floor. The qualified client thresholds under Advisers Act Rule 205-3 rose on June 29, 2026, following an April 28, 2026 Commission order indexing them for inflation: $1.4 million in assets under management with the adviser, up from $1.1 million, or $2.7 million in net worth excluding primary residence, up from $2.2 million.
Before the Comment Period Closes
The notices say nothing about how credentials should be verified in practice, which makes the 60-day window a genuine opportunity for issuers, fund managers and securities counsel to put operational detail on the record.
Three things worth doing now, regardless of what the Commission decides:
Add the existing credential pathway to subscription documents and accredited investor questionnaires, including Series 7, 65, and 82, so credentialed investors get captured correctly instead of pushed through a financial review.
Decide which registries your process treats as authoritative, and which statuses you will accept as good standing. Write it down before you need it.
Check that whoever performs your verification can reach a defensible conclusion on a credential claim and not only on a tax return.
That third one is where third-party verification earns its keep. An accredited investor certificate is worth exactly as much as the review behind it, and that review is a legal judgment: on these facts, does this evidence establish this status under this provision of Rule 501(a)? An issuer who answers internally owns the answer and the liability attached to it.
That judgment is what VerifyInvestor.com exists to make. Verifications are reviewed by a licensed attorney, turnaround is typically on the same calendar day, and what comes out is an auditable record that sits in the offering file and still makes sense years later. The same process covers qualified purchaser and qualified client verification, AML/KYC screening, and, through VerifyInvestor’s On-ChainPass, tokenized investor credentials that travel with the investor into on-chain offerings.
If these pathways are adopted, the accredited pool gets bigger and considerably more varied, and the question of what counts as reasonable gets asked a lot more often.
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This article is for general information and is not legal advice. Issuers and investors should consult qualified securities counsel about their specific facts.