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Small businesses are an important part of the U.S. economy. When small businesses need to raise capital from the public, they must comply with securities laws and regulations. Most operators of small businesses are unfamiliar with the intricacies of securities law. As a result, they are likely to unwittingly violate these laws. This, combined with the high relative cost to small businesses of registering securities, led the Securities and Exchange Commission (SEC) to create several exemptions, including Rule 504 of Regulation D. Until recently, Rule 504 was a virtually unlimited exemption from the federal registration requirement for offerings of under $1 million. But recent amendments have made the Rule 504 exemption available to substantially fewer small businesses. This Article explores the evolution of the small offering exemption, including those recent amendments. It looks at the costs and benefits of securities regulation, and explains why the SEC should return to an unconditional, or at least virtually unconditional, small offering exemption.