The SEC yesterday issued final rules that increase the aggregate amount of money that may be offered and sold for Direct Public Offerings using the federal exemption from $1 million to $5 million. In conjunction with those rules, the SEC also introduced additional investor protections with rules designed to disqualify “bad actors.
Highlights of the Amendments to Rule 504
The new SEC amendments to Rule 504 of Regulation D increase the aggregate amount of securities that may be offered and sold under Rule 504 in any 12-month period from $1 million to $5 million, and disqualifies certain bad actors from participation in Rule 504 offerings.
“These changes are huge” says John Katovich, founder and President of Cutting Edge Capital and Cutting Edge Counsel. “Up until today, we have only been able to help companies with raises smaller than $1 million per year when utilizing the Regulation 504 exemption” said Katovich. “Today, however, we can now use these new rules to help companies raise up to $5 million every year, from residents in more than one state, and regardless of where the company is located or what their in-state activities might be. This is going to be a game-changer for many companies that were previously constrained with the old $1 million limits. With companies now able to raise $5 million each year and offer securities to everyone, not just wealthy accredited investors, the entire landscape will change and we are now much better equipped to democratize capital and to help all individuals to begin to build wealth by investing in their communities of choice.”
About Cutting Edge Capital
Cutting Edge Capital—based in Oakland, CA—provides social ventures with capital raising strategies open to accredited and non-accredited investors. CEC also develops capital market tools, as well as tools for aggregating community capital. Cutting Edge Capital’s mission is to democratize capital and to engage more people as investors, to the new economy — an economy that is resilient, just, and sustainable.