Marketing Private Investment Offerings is Easier Under New SEC Guidance

The Securities and Exchange Commission (SEC) has taken a step toward simplifying the capital-raising process for private companies by issuing updated guidance,  further reducing friction in the marketing of private investment opportunities. These developments are particularly relevant for start-ups, early-stage companies, and other issuers relying on private placements of equity or debt securities to fund growth.

General Solicitation and Accredited Investors

Historically, private securities offerings have been subject to strict limitations on how they could be marketed. Issuers, the individuals and entities conducting private placements, were prohibited from engaging in “general solicitation” or general advertising—meaning they could not publicly promote investment opportunities through websites, social media, email campaigns, or other broadly accessible channels.

Regulatory changes over the past decade relaxed this prohibition, allowing issuers to engage in general solicitation provided they took additional steps to ensure that all purchasers were “accredited investors.” Accredited investor status, for individuals, is generally based on financial thresholds, including a net worth exceeding $1 million (excluding a primary residence) or annual income exceeding $200,000 ($300,000 jointly with a spouse) with a reasonable expectation of similar income in the current year. Accredited investor status for entities is an entirely different process. Entities may also qualify as accredited investors, including certain institutional investors such as banks, insurance companies, registered investment companies, and business development companies, as well as entities with total assets in excess of $5 million that were not formed for the specific purpose of acquiring the securities offered. In addition, certain entities in which all equity owners are themselves accredited investors may qualify as accredited investors under applicable SEC rules.

While these changes opened the door to broader marketing, they introduced a new challenge: verification.

The Practical Challenge of Investor Verification

Under earlier interpretations of the rules, issuers relying on general solicitation were expected to verify accredited investor status through relatively intrusive means. Commonly cited approaches included:

• Obtaining written confirmation from an investor’s attorney or certified public accountant attesting to the investor’s accredited status, or

• Reviewing personal financial documentation, such as tax returns or other detailed income or net worth records.

In practice, these methods proved largely unworkable. Investors were often unwilling to share sensitive financial documents directly with issuers, and professional advisors were reluctant to provide formal attestations due to liability concerns. 
As a result, many issuers avoided general solicitation altogether, despite its potential benefits.
New SEC Guidance: A More Flexible Approach

The SEC has now clarified that, depending on the facts and circumstances (which must align with the facts and circumstances presented in the no-action letter), issuers may be able to satisfy the “reasonable steps” requirement for verifying accredited investor status without third-party attestations or detailed financial disclosures. This clarification appears in the SEC’s updated FAQs  on private offerings and is further supported by a related no-action letter issued by the SEC.
Under the guidance recently provided, the SEC indicated that an issuer may reasonably conclude it has taken appropriate verification steps where certain conditions are met, including:

• The investor agrees to make a substantial minimum investment—of $200,000 for a natural person or $1,000,000 for a legal entity;

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  The investor provides written representations confirming accredited investor status and confirming that the investment is not financed, directly or indirectly, by a third party; and

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  The issuer has no actual knowledge of facts suggesting that the investor is not accredited or that the investment is being financed by someone else.

When these conditions are present, the issuer may rely on investor self-certification rather than external verification.
Practical Implications for Issuers

This guidance significantly reduces the administrative burden associated with marketing private offerings through general solicitation. Issuers can now structure offerings with meaningful minimum investment thresholds and rely on investor representations, provided they remain attentive to red flags or contrary information.
For many companies, this change makes it more feasible to publicly market private investment opportunities while remaining compliant with securities laws regarding private placements. It also allows issuers to avoid placing investors or their advisors in uncomfortable or impractical verification roles that had been required to date.

A Continued Shift Toward Capital Formation

Taken together, these developments reflect an ongoing effort by regulators to balance investor protection with capital formation. By reducing procedural barriers that offered limited practical benefit, the SEC is signaling a more pragmatic approach to private fundraising—particularly for emerging companies that rely heavily on private capital markets.
That said, the guidance does not eliminate compliance obligations – particularly extensive anti-fraud requirements and bad-actor disqualifications. Issuers must still evaluate the totality of the facts and circumstances of each offering and ensure that offering materials, disclosures, and investor communications remain accurate and not misleading.

Conclusion

The SEC’s recent guidance represents a meaningful evolution in the regulation of private offerings, particularly for issuers interested in broader marketing strategies. By permitting reliance on investor self-certification in appropriate circumstances, the SEC has removed a long-standing obstacle to general solicitation while preserving the core accredited investor framework.
Companies considering a private offering should carefully assess how these changes apply to their specific facts and consult experienced securities counsel to structure offerings in a manner that aligns with both regulatory requirements and business objectives.