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Charles Griffin Intelligence launches accredited investor verification service

As hedge funds anticipate the finalisation of a JOBS Act provision that will lift advertising restrictions on hedge funds, they are faced with the new challenge of installing more robust investor due diligence procedures.

Although the Securities and Exchange Commission (SEC) has taken a flexible approach to identifying the specific procedures funds must demonstrate to ensure their investors are accredited, SEC Commissioner Elisse Walter has made one thing very clear: no matter what investor accreditation approaches are implemented by hedge funds, the SEC will scrutinise them closely.
In response to the ambiguity surrounding how funds must ensure their investors are accredited, Charles Griffin Intelligence has launched its Accredited Investor Verification Service. The service will act as a hedge against the SEC’s expanded regulatory oversight, and will ensure that fund managers demonstrate, among other things, that their investors are truly accredited and financially sophisticated.
“While hedge fund managers now have more opportunities to market their funds to the public, they also open themselves to greater scrutiny than ever before, and our services help them withstand that scrutiny,” says Philip Segal, founder of Charles Griffin Intelligence. “Our Accredited Investor Verification Service eliminates the worry for hedge fund managers, who will now have to show they have taken ‘reasonable steps’ to verify that all purchasers of funds are accredited investors.”
Hedge funds are entering a new era in which the suitability and sophistication of investors are more important than ever, Segal says, which means hedge fund managers will need more sophisticated research tools. Simple desktop computer searches and superficial bank inquiries are not enough to guarantee SEC compliance.
The Accredited Investor Verification Service goes beyond the routine background checks that many hedge funds now employ when accepting new investors. Charles Griffin Intelligence will examine investors’ professional licenses, US securities filings, litigation filings, bankruptcy and lien filings, NFA and FINRA records, and also conduct on-site court searches for all relevant public records.
The new service offers three levels of diligence – Gold, Silver, and Bonze. The research takes from as little as one business day (Bronze) up to one week (Gold), and the cost ranges from USD450 (Bronze) to USD2,000 (Gold) per individual.
Segal says: “While the SEC has yet to provide definitive guidance on investor accreditation, hedge funds need to begin taking steps now to make sure their due diligence is sufficient.”

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