SEC Raises Crowdfunding Limits
The Securities and Exchange Commission has adopted amendments to increase the amount of money companies can raise through crowdfunding. The move was made to adjust for inflation.
The agency 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 S. Piwowar. “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 conform several rules and forms to amendments made to the Securities Act of 1933 (“Securities Act”) and the Securities Exchange Act of 1934 (“Exchange Act”) by Title I of the JOBS Act.
The Commission approved the new thresholds March 31. They will become effective when they are published in the Federal Register.
Every five years the SEC is directed to index the annual gross revenue amount used to determine emerging growth company status to inflation to reflect the change in the Consumer Price Index for All Urban Consumers (“CPI-U”) published by the Bureau of Labor Statistics (“BLS”).
Here are the new directions:
Table 1: Inflation-Adjusted Amounts in Rule 100 of Regulation Crowdfunding (Offering Maximum and Investment Limits)
| Regulation Crowdfunding Rule | Original Amount | Rounded Inflation-Adjusted Amount |
| Maximum aggregate amount an issuer can sell under Regulation Crowdfunding in a 12-month period (Rule 100(a)(1)) | $1,000,000 | $1,070,000 |
| Threshold for assessing investor’s annual income or net worth to determine investment limits (Rule 100(a)(2)(i) and (ii)) | $100,000 | $107,000 |
| Lower threshold of Regulation Crowdfunding securities permitted to be sold to an investor if annual income or net worth is less than $107,000 (Rule 100(a)(2)(i)) | $2,000 | $2,200 |
| Maximum amount that can be sold to an investor under Regulation Crowdfunding in a 12-month period (Rule 100(a)(2)(ii)) | $100,000 | $107,000 |
Table 2: Inflation-Adjusted Amounts in Rule 201(t) of Regulation Crowdfunding (Financial Statement Requirements)
| Regulation Crowdfunding Rule | Original Offering Threshold Amount | Rounded Inflation-Adjusted Amount |
| Rule 201(t)(1) | $100,000 | $107,000 |
| Rule 201(t)(2) | $500,000 | $535,000 |
| Rule 201(t)(3) | $1,000,000 | $1,070,000 |
