SEC Amends Rule 701(E) Threshold For Compensatory Offerings

As mandated by the Economic Growth, Regulatory Relief, and Consumer Protection Act, on July 18, 2018, the US Securities and Exchange Commission (SEC) amended Rule 701(e) under the Securities Act of 1933 (Securities Act) to increase the aggregate sales price or amount of securities sold during any consecutive 12-month period from $5 million to $10 million. Except for the increase in the aggregate sales price or amount of securities sold under Rule 701(e), the amendment does not change the operation of Rule 701. This amendment will become effective immediately upon publication in the Federal Register.

Rule 701 provides an exemption from the registration requirements of the Securities Act for securities issued in compensatory circumstances to specified investors (i.e., officers, directors, employees and consultants) by companies that are not subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934. If the aggregate sales price