Accreditation

Learn how issuers verify and attest to investor accreditation on CapSign.

What is Accreditation?

Accredited investors meet SEC income or net worth thresholds and can invest in certain private offerings.

Why It Matters

Reg D 506(c) offerings require ALL investors be accredited and verified.

Issuer-Issued Attestations

On CapSign, issuers verify accreditation and issue attestations through the UI.

Why Issuers Issue?

• Issuer responsibility - Issuers must verify investor qualifications

• Privacy - Investors don't share financial details with CapSign

• Flexibility - Issuers use their verification process

• Compliance - Meet SEC reasonable steps requirement

For Investors

Getting Accreditation Attestation

1. Contact issuer with documentation:

   • Income verification (last 2 years tax returns, W-2s)

   • Net worth statement (assets and liabilities)

   • Professional credentials (Series 7, 65, 82 licenses)

2. Issuer reviews documentation

3. Issuer issues attestation via CapSign UI

4. Attestation available immediately for use

What Qualifies

Income test:

• $200k+ individual income (last 2 years)

• $300k+ joint income (last 2 years)

• Expectation of same this year

Net worth test:

• $1M+ net worth (excluding primary residence)

Professional:

• Series 7, 65, or 82 license holder

• Knowledgeable employee of private fund

Entity:

• Entity with $5M+ in assets

• Entity owned entirely by accredited investors

For Issuers

Reviewing Investor Documentation

When investor submits documentation:

1. Request documents:

   • Tax returns (last 2 years)

   • W-2s or 1099s

   • Bank/brokerage statements

   • CPA letter

   • Or professional licenses

2. Verify authenticity:

   • Check documents are complete

   • Verify calculations

   • Confirm expectation for current year

3. Document review:

   • Keep records of review

   • Note verification method

   • Save documentation

Issuing Attestation via UI

1. Navigate to Admin → Investors

2. Select investor

3. Click Issue Attestation

4. Choose type:

   • Accredited Investor (income)

   • Accredited Investor (net worth)

   • Accredited Investor (professional)

   • Qualified Purchaser

5. Set expiration (typically 90 days)

6. Sign with wallet

7. Attestation issued on-chain

Managing Attestations

• View all issued attestations

• Check expiration dates

• Revoke if needed (e.g., if investor circumstances change)

• Renew before expiration

Attestation Details

What's Included

• Wallet address

• Qualification type

• Issue date

• Expiration date

• Issuer address

• Supporting documentation hash (optional)

What's NOT Included

• Investor name

• Income amounts

• Net worth details

• Tax returns

• Financial statements

Privacy-preserving - only proof of qualification on-chain.

Verification Process

Reasonable Steps

SEC requires issuers take "reasonable steps" to verify:

Acceptable methods:

• Review tax returns and W-2s

• Review financial statements

• CPA letter

• Broker-dealer verification

• Professional credentials

Not acceptable:

• Self-certification alone

• Unverified questionnaires

Documentation

Keep records of:

• Verification method used

• Documents reviewed

• Date of verification

• Person who verified

• Basis for determination

Expiration and Renewal

Why Expirations?

• Circumstances change

• Regulatory requirement for periodic re-verification

• Best practice (typically 90 days for offerings)

Renewal Process

1. Investor submits updated documentation

2. Issuer reviews

3. Issues new attestation

4. Old attestation expires or is revoked

Use Cases

Scenario 1: New Investor

Investor wants to invest in 506(c) offering:

1. Investor contacts issuer

2. Provides last 2 years tax returns

3. Issuer verifies $250k income each year

4. Issues "Accredited Investor (income)" attestation

5. Investor can now invest

Scenario 2: Professional

Licensed professional:

1. Provides Series 7 license verification

2. Issuer confirms active license

3. Issues "Accredited Investor (professional)" attestation

4. Can invest without financial disclosure

Scenario 3: Entity

Investment entity:

1. Provides entity financial statements

2. Shows $5M+ in assets

3. Issuer verifies

4. Issues "Accredited Entity" attestation

Best Practices

For Issuers

• Thorough review - Don't rush verification

• Document everything - Keep detailed records

• Set reasonable expirations - 90 days typical

• Consistent process - Verify all investors same way

• Consult counsel - If unsure about qualification

For Investors

• Provide complete docs - Don't leave anything out

• Use recent documents - Within last 90 days

• Be honest - Misrepresentation has legal consequences

• Keep private - Only share with trusted issuers

Legal Considerations

Issuer Liability

Issuers are responsible for:

• Verifying investor qualifications

• Taking reasonable steps

• Maintaining records

• Compliance with securities laws

Investor Liability

False representation of accreditation status:

• Securities law violation

• Potential civil/criminal penalties

• Investment may be rescinded

Always be truthful.

FAQs

Q: Can I use one attestation for multiple offerings? A: Yes! Attestations are portable across CapSign offerings.

Q: What if issuer won't verify me? A: Invest in 506(b) offerings (up to 35 non-accredited allowed) or Reg A+.

Q: Can I self-attest? A: Not for 506(c). Issuer must verify.

Q: How long does verification take? A: Depends on issuer. Typically 1-3 days.

Q: What if my attestation expires? A: Renew before investing again.

See Also

• Persona Verification

• Attestations

• SEC Accredited Investor Definition