Understanding the 506(c) Fund Structure for Accredited Investors

For decades, private real estate investments were largely restricted to closed networks under Rule 506(b), which prohibited general solicitation. The introduction of Rule 506(c) under the JOBS Act fundamentally changed how sponsors can connect with capital.

What is a 506(c) Fund?

A 506(c) offering allows sponsors like SIG Fund to publicly advertise their investment opportunities, provided that all participating investors are verified as "Accredited Investors." This structure brings private equity out of the shadows, allowing investors to discover and evaluate institutional-grade opportunities online.

The Verification Process

Unlike 506(b) offerings where investors simply self-certify, 506(c) requires reasonable steps to verify accredited status. This is typically handled efficiently through third-party verification letters from a CPA, attorney, or wealth advisor, or through secure online verification portals. While it adds a small administrative step, it provides greater regulatory certainty for the fund and broadens access for the investor.