SEC Issues Guidance on Self-Certification for Accredited Investors, Streamlining Capital Raising Process

In a No Action Letter, dated March 12, 2025, the U.S. Securities and Exchange Commission (the “SEC”), through its Division of Corporation Finance’s Office of Small Business Policy, confirmed that accredited investors are permitted to self-certify eligibility for participation in private securities offerings through a written statement. This self-certification process, along with a minimum investment requirement of at least $200,000, allows companies raising capital to simplify accreditation verification. As a result, the process of advertising offerings to potential investors will be streamlined, thereby likely having a significant impact on capital fundraising.

The No Action Letter was issued in response to a letter from Latham & Watkins LLP, dated March 6, 2025, seeking clarification regarding the verification of investors meeting the necessary accreditation criteria. Pursuant to Regulation D promulgated under the U.S. Securities Act of 1933, investors must meet specific wealth or financial sophistication standards, such as an income exceeding $200,000 or a net worth of over $1 million, to be considered “accredited”. These criteria are designed to ensure that investors possess the financial capacity and knowledge to participate in private securities offerings that qualify for exemptions from registration under the federal securities laws.

The SEC’s response should make it easier for companies to raise capital through private offerings by access to a broader pool of investors. Prior to this guidance, the accreditation verification process was seen as complex and burdensome, deterring many companies from using the available advertising channels. By permitting investors to self-certify their accreditation status, administrative barriers previously in place have been significantly reduced.

However, although the SEC’s guidance provides greater flexibility for companies seeking to raise capital, it is important to note that this is not a formal rule or regulation. The SEC clarified that the guidance does not alter existing laws or impose new obligations on market participants. Instead, it offers a simplified approach to accreditation verification without altering the overall regulatory framework.

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For more information on this issue or other corporate matters, please contact:

Morris F. DeFeo, Jr. at +1 212 592 1463 or [email protected]
Jessie Root at +1 212 592 5961 or [email protected]

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