Here’s just one of the questions we’re frequently asked: How can a trust qualify as an Accredited Investor for a Rule 506(c) offering?
A. If a) an attorney, CPA or Registered Investment Advisor (RIA) represents the trust (in that capacity and not as the trustee) and b) the trust is the investor, the attorney/CPA/RIA can provide a verification letter attesting that the Trust (Investor) meets the definition of an Accredited Investor below:
(7) Any trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person as described in § 230.506(b)(2)(ii);
B. Alternatively, the trustee can provide verification documents to the Issuer or to a third-party verification service, who will make the assessment themselves. For the Issuer to be the one to verify it, the trustee must provide a financial statement for the trust dated within the previous 90 days showing that it meets the above definition (total assets in excess of $5,000,000) and complete a letter attesting that the financial statement is a true and correct representation of the trust assets.
In all cases, the verification must be done within 90 days of the investment.
You will maintain whatever the trustee provides in your files in case you are ever audited by the SEC or a state securities agency to show how you were “reasonably assured” that this was an accredited investor.
NOTE: This information is of a general, educational nature and may not be construed as legal advice pertaining to your specific offering, exemption or situation. Any such advice must be sought from your own attorney pursuant to an attorney-client relationship, after consideration of your specific facts or questions. At Syndication Attorneys, PLLC, we will be happy to discuss your investing goals with you. You can schedule a free, 30-minute consultation by clicking this link.