Investment Process FAQ - Invest on Main Street

Investment Process FAQ

Why am I required to verify my accredited status for a 506(c)?
For a Regulation D offering, following SEC Rule 506(c), all investors must be accredited. This generally means you have sufficient net worth or income to absorb losses to your investment. Investors are required to verify their accredited investor status.

A fast and simple way to submit proof of your eligibility is to have an accountant/lawyer/broker-dealer/investment advisor complete the form linked here.  If you have them complete this, you will be able to upload it to your account after submitting the payment.

Here is a link from the SEC for more information about the 506(c) offering. 

An individual accredited investor is someone that has:

  1. Has a net worth higher than $1,000,000 either individually or with your spouse, not including your primary residence 
  2. An annual income higher than $200,000 for individuals or $300,000 as joint income in the last 2 years and expect to earn more than that amount in this given year.
  3. An individual has good standing in the Series 7, Series 65, or the Series 82

An accredited investor as an entity is:

  1. A trust is considered to be an accredited investor if its assets exceed $5 million, not created to purchase securities and directed by a sophisticated person.
  2. An entity is an accredited investor if its investment exceeds $5 million, not created to purchase securities.
  3. An entity by which all equity owners are accredited investors.

For more information about accredited investor status please click here.

For more information about accreditation documentation please click here.

What documents can I upload to prove I am an accredited investor?

Why do investors need to provide documents for 506(c) offerings?
Companies that offer Regulation D securities under rule 506(c) in the United States are required to take reasonable steps to verify your accredited investor status. Reviewing an investor’s net worth and annual income satisfies this requirement.

Who sees the documents I upload?
A verifier will review any documents and confirm to the company that you meet the requirements–the company will not have access to any documents you upload. The personal documents you’ll share are only used for accreditation purposes.

Uploading the standard template letter
Instead of uploading personal documents, it’s recommended that users seek one of these professionals to review their personal documents and complete this standard template letter:

  • CPA
  • Accountant
  • Lawyer
  • Investment Advisor
  • Broker-Dealer

What do these documents show?
The documents you’ll upload to our secure platform, or share with a licensed professional, show your net worth and/or annual income, which satisfy the requirement for accredited investor status. 

Net Worth Qualification
These common documents show net worth:

  • 401k
  • Bank Statement
  • IRA

Annual Income qualification
These common documents, along with other government documents that support your income qualification from the past 2 years, show your annual income:

  • Tax returns
  • W2 forms
How long will the 506(c) accredited investor verification process take place?
The accredited investor verification process takes between 5-10 business days.
Do I still have to verify myself again if I am already verified as an accredited investor?

Yes, you will need to verify your status for every 506(c) offering that you would like to participate in, in case your status changes between offerings. It is best for each company making an offering to ensure that regulatory requirements are met to ensure they are compliant with securities laws.

Can I still invest in a 506(c) if I am not an “accredited investor”?
No, if you are not an accredited investor you will not be able to participate in the 506(c) offering.
Is there a minimum/maximum investment amount in a 506(c) ?
There is no requirement under securities law for a 506(c) offering to have a minimum or maximum investment amount.  However, a minimum or maximum may be set on a deal-by-deal basis.

Click here to check how you can see if your deal has a minimum.

Can I cancel my 506(c) investment?
Once you have funded and been countersigned by the company, you will need to contact them directly for anything surrounding changes to the investment, as securities may have already been issued to you. If securities have been issued, it is a more involved and costly process for a company to refund you and cancel them.

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