New Legislation Moving through Congress is set to Raise Equity Crowdfunding Limits

Earlier this year, Title III of the Jumpstart Our Businesses Startup (JOBS) Act was finalized with the SEC release of Regulation Crowdfunding.  Not even three months after the new rules went into effect; a bill has passed in the House of Representatives that will amend the regulations to raise the cap on equity crowdfunding from $1 million to $5 million.

The Fix Crowdfunding Act, sponsored by Representative Patrick McHenry of the House Financial Services Committee, seeks to amend the Securities Act of 1933 to raise the limits small business and startups can raise through crowdfunding.  Additionally, the bill will modify the JOBS Act to allow crowdfunding portals to prohibit issuers from selling securities if it is discovered that the issuer has disseminated an untrue statement or omission of material fact to investors.

A second bill entitled the Supporting America’s Innovators Act, also sponsored by Representative McHenry, seeks to amend the Investment Company Act of 1940 by defining a “qualifying venture capital fund“ as one not able to purchase more than $10 million in securities from any one issuer and enlarging a pool of investors in a qualifying venture capital fund from 100 people to 250.

Both bills have been received by the Senate for future review.