Association of Online Investment Platforms Ask SEC to Immediately Boost Reg CF Cap to Help Alleviate Challenges of COVID-19


In a public statement, the Association of Online Investment Platforms (AOIP) has asked the Securities and Exchange Commission (SEC) to move quickly and to improve the regulatory environment to support small businesses during the ongoing COVID-19 health crisis.

Addressed to SEC Chairman Jay Clayton, and copied to all SEC Commissioners as well as relevant leadership individuals in both the US House of Representatives and Senate, the letter requests several key updates to Reg CF [Regulation Crowdfunding].

The AOIP states that smaller firms are being disproportionately impacted by the Coronavirus.

“Small business is the lifeblood of the US economy: they create two-thirds of net new jobs and drive US innovation and competitiveness, and account for 44 percent of US economic activity. While countless small and emerging businesses are in a literal life-or-death battle during this pandemic, we believe the Commission can make a fundamental difference by facilitating a more efficient, democratic private capital ecosystem to support these small businesses that act as the central nervous system of communities across the country.”

The AOIP says that online investment platforms utilizing Reg CF “have responsibly facilitated the funding of thousands of small businesses in a compliant manner” and during the pandemic, these regulated platforms have effectively provided access to capital for these smaller firms. Now is the time for the Commission to act and help revitalize the nation with three changes to existing Reg CF rules, according to the Association.

The AOIP requests the following immediate improvements:

  • Increase the funding cap of Reg CF to at least $5 million
  • Align investor limits to those of Reg A+ Tier 2 which includes no limit on accredited investor participation
  • Permit “Testing the Waters” (TTW), again something already utilized under Reg A+ Tier 2

These updates are already under consideration by the Commission as part of an ongoing exempt offering ecosystem review. The AOIP is asking the Commission to pick up the pace and make these updates now.

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