June 24, 2012
The JOBS Act sets limits on how much investors may invest in securities issued under the crowdfunding exemption. Funding portals are responsible for ensuring that no investor exceeds the limits that the JOBS Act sets. In Section 4A(a)(8) of Title III of the JOBS Act funding portals are required to "make such efforts as the Commission determines appropriate, by rule, to ensure that no investor in a 12-month period has purchased securities offered pursuant to section 4(6) that, in the aggregate, from all issuers, exceed the investment limits set forth in section 4(6)(B)."
Section 4(6)(B), according to Section 302 of the JOBS Act, contains a limit with respect to single issuers rather than the aggregate limit from all investors referenced in 4A(a)(8), stating "the aggregate amount sold to any investor by an issuer, including any amount sold in reliance on the exemption provided under this paragraph during the 12-month period preceding the date of such transaction, does not exceed (i) the greater of $2,000 or 5 percent of the annual income or net worth of such investor, as applicable, if either the annual income or the net worth of the investor is less than $100,000 and (ii) 10 percent of the annual income or net worth of such investor, as applicable, not to exceed a maximum aggregate amount sold of $100,000, if either the annual income or net worth of the investor is equal to or more than $100,000..."
This apparent inconsistency presents the issue of whether investors are limited from investing certain amounts with one single issuer, or whether they are limited from investing beyond certain amounts on crowdfunding investments in the aggregate during a single year.