On October 1, 2026, the SEC's Division of Examinations published a new exam handbook for the firms it examines. One passage sets the tempo. The SEC expects records to be available to its staff within 24 hours in most circumstances, although staff usually allow two weeks for the first request. A syndication sponsor that is not a registered firm will never receive that letter. The logic of 506(c) recordkeeping is the same, though. The proof the rule demands either exists on the day someone asks, or it has to be rebuilt from memory and email.
Rule 506(c) lets a sponsor advertise a raise, but only to buyers it has checked. Every purchaser must be accredited, the issuer must have taken reasonable steps to verify it, and the burden of showing both rests on the issuer. A sponsor should therefore build one record for each raise while the raise happens, holding the verification files, acceptance records, signed documents and audit log together, rather than rebuild it when the SEC, an investor or a buyer asks. The methods are set out in the guide to accredited investor verification under 506(c), and the record is what has to outlast them.
What Rule 506(c) Asks a Sponsor to Prove
The SEC set the standard when it adopted the rule in Securities Act Release No. 9415 on July 10, 2013. Whether a sponsor's steps were reasonable is "an objective determination," judged on the facts of each purchaser and sale. The release also said what falls short. Having an investor check a box on a questionnaire or sign a form does not amount to reasonable steps, absent other information about the investor. Because the issuer must show its offering is exempt, the SEC added that issuers should keep adequate records of the steps taken.
SEC staff later closed the gap from both sides. In Question 260.07 of the Securities Act interpretations, staff said an issuer that skipped verification cannot rely on Rule 506(c), even if every purchaser was in fact accredited. Under Question 260.06, the reverse also holds. An issuer that took reasonable steps and reasonably believed a purchaser was accredited at the time of sale keeps the exemption if that purchaser later proves not to qualify. Either way, the outcome turns on evidence of the steps.
The Four Parts of 506(c) Recordkeeping
A complete file for each investor has four parts. Each answers a different question, and an inquiry usually asks all four about one purchaser at a time.
- The verification file shows how the sponsor knew. It holds the method, the documents reviewed or the letter relied on, the review date and who did the review. Release No. 9415 allows reliance on another party's verification only with a reasonable basis, so the file should show why that party was trusted.
- Acceptance records show what the investor saw and agreed to before subscribing, such as the accredited only and risk language, the version of the offering documents and any written representations given.
- Signed documents show the commitment, meaning the subscription agreement in the exact version signed, with the sponsor's countersignature and its date.
- The audit log shows the order of events, who verified, who accepted the subscription and when, so a reader can see verification was complete before the sale.
The 506(c) capital raise checklist groups the same material into files for the whole offering. The investor file is the unit that has to stand on its own.
Why Dates Decide Whether the Record Holds
Most weak 506(c) files fail on timing rather than missing paper. The rule's net worth method requires asset statements dated within the prior three months. Staff confirmed in Question 260.08 that older statements fall outside the method. A confirmation letter from a CPA, an attorney, a registered broker dealer or an investment adviser registered with the SEC carries the same three month window. An investor reviewed in March who funds in July may still be verified under the broader reasonable steps approach, but only if the file shows what the sponsor relied on.
The same logic runs forward. Rule 506(c) lets an issuer accept a fresh written representation at the time of sale from an investor it verified within the prior five years, provided it knows of nothing to the contrary. That shortcut is only as good as the original file, which must still be retrievable years later. The guide to verification letters shows how the three month window plays out at a closing.
How Long a Sponsor Should Keep the 506(c) Record
Rule 506(c) sets no retention period, so the horizon has to be measured against the claims a record might answer. Private securities fraud claims can be brought up to five years after a violation, or two years after discovery if sooner. The SEC can seek an injunction or a bar up to 10 years after a violation. Disgorgement has the same 10 year reach where the violation requires proof of intent. A deal that holds a property for seven years can therefore face questions about its first closing more than a decade later.
Format matters as much as duration. The federal ESIGN Act accepts an electronic record in place of paper only if it reflects the original accurately. It must also stay accessible for the required period, in a form that can be accurately reproduced. A verification file in a departed employee's inbox, or in a system the sponsor has since left, fails that test long before any limit runs out. The record belongs with the entity, in a form it can export.
What Sponsors Can Do Before the Next 506(c) Raise
The practical aim is to make the record a byproduct of the raise. That starts before launch, by choosing the verification methods for the deal and writing down what each requires, including its date window. During the raise, no subscription should be accepted until the investor's verification file is complete and dated. Each person on the team should act under their own login, so the audit log names an individual. Before the first closing, producing one investor's complete record from start to finish is a fair test of the 24 hour standard.
Raveum gives U.S. real estate sponsors a white label platform to run their raises, either on their own with Tier 1 Self-Managed or with Raveum's operations team on Tier 2 Assisted, where the sponsor's own counsel approves every document the team drafts. On Tier 1, accreditation verification is set per deal and is mandatory for 506(c) offerings. Signed documents file automatically into a document vault beside the audit log and acceptance records, and team roles decide who can act on each deal. See how the Raveum Sponsor Program works.
A Record Built at the Time
The handbook's 24 hour expectation was written for registered firms, but it describes the only kind of 506(c) record that holds up. A file assembled after the question arrives shows what a sponsor can still find. A file built during the raise shows what the sponsor knew, when it knew it and who acted on it. That is the showing the SEC said in 2013 an issuer must be able to make. The 506(c) verification guide explains how to verify, and the record is what proves it was done.
Frequently Asked Questions
What Records Does Rule 506(c) Require a Sponsor to Keep?
Rule 506(c) does not list specific records, but the SEC said in its 2013 adopting release that issuers should keep adequate records of the steps taken to verify each purchaser, because the issuer must prove the exemption applies. In practice that means the verification method and evidence, its date, what the investor accepted, the signed subscription documents and a log showing the order of events.
Is a Signed Accredited Investor Questionnaire Enough for 506(c)?
No, not on its own. In Securities Act Release No. 9415, the SEC said an issuer has not taken reasonable steps if it only had the investor check a box or sign a form, absent other information indicating accredited status. A questionnaire can sit in the file beside the evidence, such as tax forms, statements or a professional's letter, but it cannot replace that evidence.
How Long Should a Sponsor Keep 506(c) Verification Records?
Rule 506(c) sets no retention period, so the practical measure is the life of the deal plus the limits on claims. Private securities fraud claims can be brought up to five years after a violation, and the SEC can seek injunctions or bars up to 10 years after one. Keeping the record with the entity, in a form that can be exported, covers both.
What Happens If a 506(c) Investor Turns Out Not to Be Accredited?
The exemption can survive. SEC staff said in Question 260.06 of the Securities Act interpretations that an issuer keeps Rule 506(c) if it took reasonable steps to verify the purchaser and reasonably believed the purchaser was accredited at the time of sale. The sponsor has to show both, which is why the dated verification file and the audit log matter.
Does the 2025 SEC Minimum Investment Guidance Remove the Need for Records?
No. Since March 12, 2025, SEC staff have accepted that a high minimum investment may support reasonable steps to verify, but only where the issuer knows of nothing suggesting a purchaser is not accredited and has confirmed the investment is not financed by a third party. Those confirmations and the investor's representations become the record, and they still need to be kept and dated.
What Should a 506(c) Audit Log Show?
A 506(c) audit log should show who did what and when for each investor, including when verification was completed, who reviewed it, when the investor accepted the offering terms and signed, and when the subscription was accepted. Each person should act under their own login, so the log names an individual rather than a shared account, and the log should export with the deal's records.
This article is for general education only and is not legal, tax or investment advice. Securities and tax rules change and depend on each sponsor's facts, so work with qualified securities counsel and tax advisors before launching an offering. Real estate investments involve risk, including loss of capital, illiquidity and changes in property values. Offerings on Raveum are available to eligible investors only and are not open to the general public.
