A Fund Administrator’s Perspective on the New SEC Guidance on Rule 506(c) Verification

The SEC recently released new guidance that eases the burden surrounding the accredited investor verification requirements under Rule 506(c) of Regulation D. The guidance was provided through a no-action letter on March 12th, 2025, and gives clarity on the steps issuers can take to verify accredited investor status. Investors can now self-certify their accredited status if they make a minimum investment of $200,000 for individuals or $1 million for public entities. Issuers also no longer need to obtain extensive documentation such as IRS forms, bank statements, or verification letters. Despite the update, issuers must still take reasonable steps to verify accredited status. From a fund administrator perspective, here is how we view it.

What Changed

In the past, every time a fund manager opened a new fund or raised another round of capital under 506(c), they would often have to perform an accredited investor re-verification, even for repeat investors. This, of course, meant more paperwork, delays, and back-and-forth. This was especially frustrating when nothing about the investor’s financial situation changed.

However, under the new guidance, if an investor has already been verified as accredited and it was done within the last five years, the fund manager can reuse that verification as long as there is no reason to believe their status has changed.  So, if the fund manager has maintained the documentation for the past five years and everything still checks out, they are all set.

This is a smart, practical step forward by the SEC, acknowledging that many accredited investors are not likely to become unaccredited overnight. Re-verifying the same investors for each new fund or capital raise under 506(c) added unnecessary friction and cost.

What This Means for Fund Managers

For fund managers, especially emerging managers, this is great news:

• They will spend less time chasing documents from investors they already know since they can now reuse previously verified investor data, assuming it is within the five-year window and no status changes occurred.
• This makes follow-on raises faster and less expensive since they do not start from scratch with every 506(c) offering.
• Legal and compliance teams can focus resources on new investors, not repeatedly verifying long-term, stable LPs.

The result? Less friction during the fundraising process with more focus on building investor relationships and fewer barriers to deploying capital efficiently.

What This Means for Fund Administrators

For fund administrators, this change:

• Reduces the administrative lift when supporting fund managers during ongoing or follow-on fundraising rounds.
• It simplifies how they assist fund managers in documenting verification without having to repeat due diligence on existing, previously verified accredited investors.
• It makes the entire investor onboarding process smoother and faster, especially for follow-on funds and new capital raises.

Fund administrators can now maintain and reference historical verification files, track their dates, and help determine when a re-verification is or isn’t needed, lowering compliance risks and costs.

Fundraising Is Easier

This change will encourage more emerging fund managers to embrace 506(c), especially now that the biggest compliance headache of accredited investor verification has become more manageable.

The article was also published on Family Wealth Report.