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Regulation and Compliance > Federal Regulation > SEC

SEC Boosts How Much Firms Can Raise via Crowdfunding

By Melanie Waddell

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The Securities and Exchange Commission said Wednesday that the agency has adopted amendments to increase the amount of money companies can raise through crowdfunding to adjust for inflation. 

The securities regulator also approved amendments that adjust for inflation a threshold used to determine eligibility for benefits offered to “emerging growth companies” (EGCs) under the Jumpstart Our Business Startups (JOBS) Act.

“Regular updates to the JOBS Act, as prescribed by Congress, ensure that the entrepreneurs and investors who benefit from crowdfunding will continue to do so,” said SEC Acting Chairman Michael Piwowar, in a statement. “Under these amendments, the JOBS Act can continue to create jobs and investment opportunities for the general public.”

The SEC is required to make inflation adjustments to certain JOBS Act rules at least once every five years after it was enacted on April 5, 2012. 

In addition to the inflation adjustments, the SEC adopted technical amendments to make several rules and forms conform to amendments made to the Securities Act of 1933 and the Securities Exchange Act of 1934 by Title I of the JOBS Act.

The new thresholds were approved by the Commission on March 31 and become effective when they are published in the Federal Register.

For instance, the maximum aggregate amount an issuer can sell under Reg CF in a 12-month period was raised from $1 million to $1,070,000.

The investors’ annual income or net worth threshold to determine investmnet limits was raised from $100,000 to $107,000.

Under Reg CF’s Rule 201(t)(2), the threshold was raised from $500,000 to $535,000.

Piwowar noted at conference in late-February that while 163 U.S. securities-based crowdfunding deals have been initiated and 33 completed since the SEC’s Regulation Crowdfunding kicked off last May, the agency’s final rules may be “too restrictive.”

He noted at the event that more than $10 million has been raised since the Reg CF rulemaking went into effect as part of the JOBS Act, with most offerings “still ongoing.”

Piwowar said he looks forward to seeing “empirical studies of capital raising” under the crowdfunding rules, and added his views that the commission should consider “whether any further steps should be taken to improve our crowdfunding regulations, including the use of exemptive authority,” and also that Congress may need to consider “whether any legislative changes to the law should be made.”

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