September 24, 2012
The Commission's proposed approach is good, but a signed form filled out by the investor should be sufficient to establish accredited investor status.
The JOBS Act was passed to make it easier for small businesses to raise capital and create jobs. The Commission should respect that intent, and not make the process of qualifying investors burdensome to the issuer.
The purpose of Regulation D Rule 506 is to protect unsophisticated investors from getting "in over their heads" investing in unregistered securities. The intent is to weed out investors who cannot adequately judge the risks of the investment, and those who would carelessly invest more money than they could afford to lose.
When presented with a form that clearly presents the requirements to qualify as an accredited investor, any honest unaccredited investor would withdraw from the investment. If the Commission has any doubt of this, then require language specifying that "the SEC requires this form to exclude investors who lack the experience or financial resources to avoid or absorb a significant financial loss."
Requiring the investor to sign a form asserting their qualification as an accredited investor meets the reasonable steps to verify and reasonable belief standards, while also supporting the intent of the JOBS Act -- to make it easier for American businesses to create jobs.