Under current law, the Securities and Exchange Commission (SEC) prohibits the sale or delivery of securities that have not been registered with the SEC. Certain transactions are exempt from this prohibition. H.R. 4850 would expand the exemption to include the sale of securities that meet certain criteria regarding the number of purchasers and aggregate offering amount sold by the issuer in a 12-month period. The bill also would exempt such transactions from state regulation of securities offerings.
Under H.R. 4850, CBO expects only a relatively small number of securities transactions would be covered under the expanded exemption that are not currently covered by other exemptions. As a result, on the basis of information provided by the SEC, CBO estimates that implementing H.R. 4850 would have no significant effect on the agency’s costs to update, monitor, and enforce regulations. Moreover, the SEC is authorized to collect fees sufficient to offset its annual appropriation; therefore; CBO estimates that the net effect on discretionary spending would be negligible, assuming appropriations actions consistent with that authority. Enacting H.R. 4850 would not affect direct spending or revenues; therefore, pay-as-you-go procedures do not apply.
CBO estimates that enacting H.R. 4850 would not increase net direct spending or on-budget deficits in any of the four consecutive 10-year periods beginning in 2027.
H.R. 4850 would preempt state laws that govern state-level registration of security offerings to exempt some security offerings from state registration and regulation. Issuers would be exempt from registering such securities if each purchaser of the security has a pre-existing relationship with the officer of the issuer, the offering has 35 or fewer purchasers, and the aggregate amount of securities sold by the issuer does not exceed $500,000 in a 12-month period. The preemption would be a mandate as defined in the Unfunded Mandate Reform Act (UMRA) because it would limit the authority of states to apply their own laws and regulations. However, CBO estimates that the preemption itself would impose no duty on states that would result in additional spending or a loss of revenues.
H.R. 4850 contains no private-sector mandates as defined in UMRA.