10.9. Aggregation

Another risk of conducting multiple offerings is aggregation. Aggregation occurs when funds raised in one exempt offering count toward the dollar cap of another exempt offering. Aggregation can occur when one exempt offering comes too soon after another.

It is important not to confuse aggregation with integration. Unlike integration, aggregation does not cause the offerings to be combined into a single offering. It simply means that the issuer will not be able to raise as much money as it would have if it had spread the offerings out over a longer period of time.

Also unlike integration, aggregation only occurs between two offerings using the same exemption. Registered offerings involve no risk of aggregation. Likewise, offerings conducted under an exemption with no dollar cap, such as Rule 147 intrastate offerings and Regulation S offerings, are never at risk of aggregation.

Each type of exemption has its own aggregation rules. The rules for Regulation A and Regulation D are most likely to appear on the exam.

Regulation A. If a Reg A offering ends 12 months before the start of another Reg A offering, there is no risk of aggregation. But if the first offering ends less than 12 months before the second offering starts, any sales from the first offering that took place within those 12 months will count toward the second offering’s dollar cap. Additionally, if two Reg A offerings are concurrent (i.e., they occur at the same time) then funds raised by one will count toward the other’s dollar cap.

SEC Rule 251(a)