In private securities offerings, of Regulation D provides a widely used exemption that allows issuers to raise capital without registering with the Securities and Exchange Commission (SEC). One defining feature of Rule 506(b) is that it permits sales to an unlimited number of accredited investors and up to 35 non-accredited but sophisticated investors. A central aspect of this exemption is how issuers verify accredited investor status, and this is where self-certification plays a key role. Understanding Self-Certification Under Rule 506(b), issuers may rely on an investor’s self-certification, typically through a signed questionnaire or subscription agreement, where investors affirm that they meet one or more criteria outlined in the SEC’s definition of an accredited investor. These criteria include income, net worth, or professional credentials such as Series 7, 65, or 82 licenses. Unlike Rule 506(c), which requires issuers to take “reasonable steps” to independently verify accredited status (such as reviewing tax returns or brokerage statements), Rule 506(b) allows issuers to rely on investor representations without requiring supporting documentation, provided there is no reason to doubt their accuracy. When Self-Certification Is Adequate Self-certification is generally acceptable in traditional private placements under Rule 506(b), where there is no general solicitation or public advertising. In such settings, the investors are often pre-existing clients, business associates, or professional contacts of the issuer, which provides a level of familiarity and trust.Issuers can rely on written representations if: The offering is conducted privately and selectively. The issuer has a reasonable belief in the accuracy of investor statements. The subscription documents clearly outline the accredited investor criteria. In these cases, maintaining signed self-certification forms, along with offering memoranda and communication records, typically suffices to demonstrate compliance. When Additional Documentation Is Necessary There are limits to self-certification. If an issuer has reason to...