Rule 701 Enhanced Disclosure Threshold To Increase

On May 24, 2018, President Trump signed into law the Economic Growth, Regulatory Relief, and Consumer Protection Act (Reform Act).¹ Although largely focused on regulatory exemptions for smaller financial institutions, the Reform Act also amended a number of securities law provisions focused on capital formation. For a detailed summary and analysis of the Reform Act, including the capital formation related provisions, see our client memorandum " First Major Dodd-Frank Reform Bill Signed into Law." 

One important provision tucked into the securities law-focused amendments was a direction to the Securities and Exchange Commission (SEC) to increase, from $5 million to $10 million, the amount of securities that a company can issue to employees and other service providers in reliance on Rule 701 in any consecutive 12-month period without triggering enhanced disclosure obligations.