Sponsor
Andrew R. Garbarino
Representative · R-NY
Representative · R-NY
The bill makes it materially easier and cheaper for very small businesses to raise up to $500,000 from investors by exempting those sales from federal registration (with an inflation adjustment and federal preemption), but it does so at the cost of reduced disclosure and state oversight, increasing risks for retail investors and enforcement burdens for regulators.
Small-business owners and very small issuers can offer or sell up to $500,000 in a 12-month period without federal registration, lowering compliance costs and making it easier to raise startup or operating capital.
Small issuers benefit from a CPI adjustment to the $500,000 threshold, preserving the exemption's real value over time and preventing gradual erosion of the relief by inflation.
Small issuers that operate across states face uniform federal treatment because the bill preempts state regulation of these micro-offerings, reducing multistate compliance burdens and simplifying legal requirements.
Retail and other investors will face higher risk and less disclosure because micro-offerings can avoid SEC registration, making it harder for typical investors to assess issuer risk.
State governments and investors lose an additional layer of investor protection and enforcement because the bill preempts state securities rules for these transactions.
Financial institutions and regulators could face greater monitoring and enforcement burdens because the exemption may be abused by bad actors or controlling entities seeking to evade registration.
Based on analysis of 2 sections of legislative text.
Adds a $500,000-per-12-month "micro-offering" exemption to the Securities Act, CPI-adjusted, with bad-actor disqualifications and federal preemption of state rules.
Official title: To amend the Securities Act of 1933 to provide small issuers with a micro-offering exemption free of mandated disclosures or offering filings, but subject to the antifraud provisions of the Federal securities laws, and for other purposes.
Introduced June 26, 2025 by Andrew R. Garbarino · Last progress June 26, 2025
Creates a new "micro-offering" exemption to federal securities registration that lets an issuer sell up to $500,000 in securities in a 12-month period without registering the offering. The exemption is subject to bad-actor and statutory disqualification rules, requires the SEC to CPI-adjust the $500,000 cap at least every five years, and preempts state law limits that otherwise would apply to such transactions. The change is narrowly focused on small capital raises and modifies the Securities Act of 1933; it does not create new spending, authorization programs, or state mandates beyond preemption of state securities regulation for these transactions.