SEC Securities Act Rules Simplified, Improved

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November 13, 2020
The SEC amended the rules under the Securities Act of 1933 ("Act") to simplify, harmonize, and improve certain aspects of the exempt offering framework in order to promote capital formation while preserving or enhancing important investor protections. The amendments generally:
 
  • Clarify, in one broadly applicable rule, the ability of issuers to move from one exemption to another;
  • Increase the offering limits for Regulation A, Regulation Crowdfunding, and Rule 504 offerings, and revise certain individual investment limits;
  • Set clear and consistent rules governing specific offering communications, including permitting certain “test-the-waters” and “demo day” activities; and
  • Harmonize certain disclosure and eligibility requirements and bad actor disqualification provisions.
 
Of primary importance is the increase in the offering limits for the following private offering exemptions:
 
  • The maximum offering amount under Tier 2 of Regulation A is increased from $50 million to $75 million.
  • The maximum offering amount for secondary sales under Tier 2 of Regulation A is increased from $15 million to $22.5 million.
  • The offering limit in Regulation Crowdfunding is increased from $1.07 million to $5 million.
  • The maximum offering amount under Rule 504 of Regulation D is increased from $5 million to $10 million.
 
The changes to the rules under the Act take effect 60 days after publication in the Federal Register. 
 
Steptoe & Johnson PLLC has an experienced group of securities attorneys who can help you with any state or federal compliance issues. Please contact the author or a member of the Securities Team with any questions on this alert.