Rule 506(c) of Regulation D
For the full text follow this link: https://www.sec.gov/info/smallbus/secg/general-solicitation-small-entity-compliance-guide.htm
Section 201(a) of the JOBS Act requires the SEC to eliminate the prohibition on using general solicitation under Rule 506 where all purchasers of the securities are accredited investors and the issuer takes reasonable steps to verify that the purchasers are accredited investors.
To implement Section 201(a), the SEC adopted paragraph (c) of Rule 506.  Under Rule 506(c), issuers can offer securities through means of general solicitation, provided that:

• all purchasers in the offering are accredited investors,

• the issuer takes reasonable steps to verify their accredited investor status, and

• certain other conditions in Regulation D are satisfied.

An “accredited investor” includes a natural person who:

• earned income that exceeded $200,000 (or $300,000 together with a spouse) in each of the prior two years, and reasonably expects the same for the current year, or

• has a net worth over $1 million, either alone or together with a spouse (excluding the value of the person’s primary residence).

An “accredited investor” may also be an entity such as a bank, partnership, corporation, nonprofit or trust, when the entity satisfies certain criteria. The full definition of “accredited investor” is available here.
The JOBS Act requires that issuers wishing to engage in general solicitation take “reasonable steps” to verify the accredited investor status of purchasers.  Rule 506(c) sets forth a principles-based method of verification which requires an objective determination by the issuer (or those acting on its behalf) as to whether the steps taken are “reasonable” in the context of the particular facts and circumstances of each purchaser and transaction.  Among the factors that an issuer should consider under this principles-based method are:

• the nature of the purchaser and the type of accredited investor that the purchaser claims to be;

• the amount and type of information that the issuer has about the purchaser; and

• the nature of the offering, such as the manner in which the purchaser was solicited to participate in the offering, and the terms of the offering, such as a minimum investment amount.

In addition to this flexible, principles-based method, Rule 506(c) includes a non-exclusive list of verification methods that issuers may use, but are not required to use, when seeking greater certainty that they satisfy the verification requirement with respect to natural person purchasers.  This non-exclusive list of verification methods consists of:

• verification based on income, by reviewing copies of any Internal Revenue Service form that reports income, such as Form W-2, Form 1099, Schedule K-1 of Form 1065, and a filed Form 1040;

• verification on net worth, by reviewing specific types of documentation dated within the prior three months, such as bank statements, brokerage statements, certificates of deposit, tax assessments and a credit report from at least one of the nationwide consumer reporting agencies, and obtaining a written representation from the investor;

• a written confirmation from a registered broker-dealer, an SEC-registered investment adviser, a licensed attorney or a certified public accountant stating that such person or entity has taken reasonable steps to verify that the purchaser is an accredited investor within the last three months and has determined that such purchaser is an accredited investor; and

• a method for verifying the accredited investor status of persons who had invested in the issuer’s Rule 506(b) offering as an accredited investor before September 23, 2013 and remain investors of the issuer.