Why do investors need to be accredited?
The SEC has rules surrounding investor accreditation which are intended to help protect investors by ensuring that they have baseline knowledge surrounding investments and the risks associated with investing.
There are federal regulations that require registration with the SEC prior to the sale of securities to investors which include filing substantial documentation for review by the SEC and state securities agencies. However, there are certain exemptions to these regulations.
One exemption is provided by Regulation D, which, in short, allows securities to be offered to "accredited investors" in private offerings.
What is an accredited investor?
The definition of “accredited investor” can be found in Regulation D promulgated under the Securities Act of 1933. There are several different ways to be qualified as an accredited investor, including but not limited to:
- Individuals having a pre-tax income exceeding $200,000 annually ($300,000 per couple) with the expectation of that continuing in the next year
- Individuals having a net worth of more than $1 million, excluding the value of the primary residence.
- Individuals holding certain professional certifications, designations, and licenses that are active and in good standing (Series 7, Series 82, Series 65 holders)
- Entities owning more than $5,000,000 in “investments” (as defined in the Investment Company Act of 1940, not formed for the specific purpose of acquiring the subject securities
- Entities in which all equity owners are accredited
- Trusts with total assets in excess of $5,000,000 not formed for the specific purpose of acquiring the subject securities whose purchase is directed by a “sophisticated person” as defined in Regulation D.
For the full definition of “accredited investor” please see 17 CFR § 230.501(a).
Do I need to be accredited to invest through CrowdStreet?
Yes. Investments on the CrowdStreet Marketplace are only accessible to accredited investors through our secure and private platform.
What do I need to provide to prove my accredited status?
To prove your accredited status to CrowdStreet, you have two options. Both of these options are explained in detail below.
- You can provide a letter from a qualified, independent third party verifier, such as your CPA, attorney, or wealth advisor. You can then upload this letter to your CrowdStreet account. You can use the template provided here: Investor Verification Letter Template PDF
- You can use VerifyInvestor, a third-party service provider, to prove your accredited status.
What you need to provide to prove your accreditation to your CPA depends on the manner in which you intend to invest (individually or through an entity or trust). Please consult with your CPA for more information on your specific situation.
How do I know if I meet the criteria of an accredited investor / qualified purchaser?
- All offerings on the CrowdStreet Marketplace require investors to be accredited investors or qualified purchasers. We have prepared resources to help investors navigate the criteria for each designation.
- For information, please go to this page: How do I know if I meet the criteria of an accredited investor / qualified purchaser?
How do I verify my accredited status?
CrowdStreet has two ways to proceed with verifying your accredited status.
- Use a qualified, independent third party verifier, such as your CPA, attorney, or wealth advisor. You can use the verification letter template below.
- Use VerifyInvestor.com, a third-party service provider, via your Investing Account.
How do I access VerifyInvestor.com?
- Please reference this article: How do I access VerifyInvestor.com?.
- If you have any questions about the process or required documentation, you may contact VerifyInvestor directly by emailing email@example.com.
How do I use a qualified, independent third-party verifier?
- Please download the file linked below, "Investor verification letter template.pdf", and supply it to your qualified, independent third party. Qualified parties under the SEC rules would include your CPA, attorney, or wealth advisor attached to a registered broker-dealer.
- Once the qualified party has completed your letter, you may upload it to your Transaction Center.
Can CrowdStreet verify my accreditation?
- No, CrowdStreet cannot verify your accreditation. Please do not upload financial documents (e.g. account balance statements, tax returns, W-2s, etc.) directly to your CrowdStreet account for this purpose.
- CrowdStreet does not require and will not store this type of documentation for you to invest on the CrowdStreet Marketplace. We only require a letter verifying your accredited status, per SEC regulation.
What if I'm not ready to submit an offer on the CrowdStreet marketplace yet, but I still want to verify my accreditation?
We understand there are reasons you might want to do this, such as to position yourself for offerings that might have tight subscription timelines. In this case, we can suggest two options:
- Use a qualified, independent third-party verifier, such as your CPA, attorney, or wealth advisor (Download the file linked below, "Investor verification letter template.pdf"). Please note that, in consultation with legal and in support of sponsor requirements, we require that verifications appear on issuer letterhead.
- Click here to use VerifyInvestor.com as an independent investor. You can access instructions here: How do I access VerifyInvestor.com?
What kind of documentation is required to verify my accreditation?
- In most cases, investors are asked to supply to their SEC-qualified verifier copies of W-2s or tax returns to verify annual income, and/or account balance statements to verify net worth, but additional requirements may vary depending on the complexity of the investor's financial situation.
- We suggest either reaching out to your CPA, attorney, or wealth advisor, or to use VerifyInvestor.com (they will answer questions about the specific documentation required by emailing firstname.lastname@example.org) for more information surrounding your specific situation.