Here are four steps the SEC could take under his leadership—without Congressional approval—to strengthen investment crowdfunding:
1. Adjust Offering and Investment Limits for Inflation The $5 million cap on what companies can raise under Reg CF and the limits on what investors can contribute are outdated. Inflation has reduced the real value of these thresholds, constraining growth and opportunity. The SEC can, and should, revise these limits to reflect current economic realities.
“Investment crowdfunding has proven its value by enabling thousands of companies to raise needed capital from their communities,” says Sherwood Neiss, Principal at Crowdfund Capital Advisors. “But outdated caps are holding the industry back. Adjusting for inflation will allow more businesses to thrive and give investors greater flexibility.”
2. Extend COVID-Era Audit Relief for Issuers During the pandemic, the SEC temporarily eased financial statement requirements for offerings of $250,000 or less, allowing issuers to provide certified financial statements instead of CPA-reviewed ones. Extending this relief would reduce compliance costs for small businesses still recovering economically, while maintaining investor protections through mandatory disclosures, legal accountability for certifications, and the low fraud rate historically seen under Reg CF. This targeted approach balances the needs of small businesses and investors, ensuring both access to capital and transparency.
3. Boost Education and Outreach via the SEC’s Office of the Advocate for Small Business Capital Formation Many entrepreneurs are unaware of how Reg CF can help them raise capital, and investors often don’t understand the benefits of diversifying into this emerging asset class. The SEC’s Office of the Advocate for Small Business Capital Formation should prioritize education and outreach to close this knowledge gap. Empowering entrepreneurs and investors with better information will unleash the full potential of crowdfunding.
4. Encourage Compliance with Annual Reporting Requirements Transparency is key to Reg CF’s success. The SEC should send reminders to successful issuers about their annual reporting obligations, along with clear instructions on how to comply or terminate reporting if eligible. Maintaining high compliance rates will ensure that Reg CF remains the most transparent exemption in private capital markets—an achievement that should be the envy of the world.
By taking these four steps, the SEC under Atkins’ potential leadership could build on the strong foundation of Reg CF and foster an environment where entrepreneurs can thrive and investors can benefit. “With small businesses driving economic growth and job creation, it’s imperative to support them with accessible and transparent capital-raising tools,” Neiss emphasizes. “These are commonsense actions that will have an outsized impact.”
Whether or not Atkins ultimately assumes the SEC chairmanship, the ideas outlined here represent practical measures that could—and should—be implemented to improve the crowdfunding ecosystem.
Sherwood Neiss is a Principal at Crowdfund Capital Advisors and a pioneer in the investment crowdfunding industry.
