Do I need an accreditation letter?

Updated by Sanjay Vora

SEC requires private funds to verify that investors have the necessary knowledge or financial means to make investments in private offerings. The following article will help investors with questions on these requirements.

There are two types of funds supported on Avestor's platform.

506c funds - require 3rd party accreditation letters for each investor when they join the fund.

506b funds - allows self accreditation by the investor when they join the fund.

Please check with your fund manager on if their fund is a 506c fund or a 506b fund.

506c Funds

SEC requires fund managers to have a 3rd party verification letter on file that shows that the investor was an accredited investor when they investor their capital in a fund.

Key SEC rules:

  • 3rd party accreditation letters are only valid for 90 days from date of issuance.
  • 3rd party letters must be from an attorney, CPA, registered investment advisor or 3rd party accreditation service.
  • For a given offering (such as a private fund), the fund manager can use the letter for a period of one year without requesting a new letter. After one year, the sponsor must verify in writing that the investor continues to meet the accreditation requirements if the investor goes follow on investments.
  • After 5 years, the sponsor must get a new 3rd party verification letter before taking additional capital from the investor.

506b Funds

Rules for 506b funds are different than 506c funds. Investors can self-verify their status. Investors will provide their self-verification as part of the document signing process when joining the fund.


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