The short answer is, “Because the SEC says so.”.
Here’s why: The SEC stated in the rules authorizing Rule 506(c) that the issuer must have a “reasonable assurance” that all investors are accredited, and that information has been “verified” within 90 days of the investment.
The acceptable but non-exclusive means of getting reasonable assurance cited by the SEC included a letter from a lawyer, CPA, or Registered Investment Advisor (someone with a license). It could be their own professional, or they can use a third-party verification service. The issuer can also do it themselves, by reviewing the investors’ financial or income statements, but then they have to safeguard the investor’s sensitive information from identity theft, and they would need to document what financial information was reviewed.
The good news is that the SEC issued an update to the regulation that allows the same issuer to rely on a verification for five years, along with a self-verification letter by the investor stating that nothing has changed.
For Rule 506(b), a self-verification letter by an investor is sufficient, which is the purpose of the questionnaire portion of the subscription agreement.
