---
kind: "section"
citation: "15 U.S.C. § 77d–1"
title: "15"
title_heading: "Commerce and Trade"
number: "77d–1"
heading: "Requirements with respect to certain small transactions"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/15/77d-1"
units:
  - "Chapter 2A — Securities and Trust Indentures"
  - "Subchapter I — Domestic Securities"
---

# §77d–1. Requirements with respect to certain small transactions

- (a) **Requirements on intermediaries—** A [person](/usc/15/77b.md?p=a-2) acting as an intermediary in a transaction involving the [offer](/usc/15/77b.md?p=a-3) or sale of [securities](/usc/15/77b.md?p=a-1) for the account of others pursuant to [section 77d(6)](/usc/15/77d.md)[^1] of this title shall—
  - (1) register with the [Commission](/usc/15/77b.md?p=a-5) as—
    - (A) a broker; or
    - (B) a funding portal (as defined in [section 78c(a)(80)](/usc/15/78c.md?p=a-80)[^2] of this title);
  - (2) register with any applicable self-regulatory organization (as defined in [section 78c(a)(26) of this title](/usc/15/78c.md?p=a-26));
  - (3) provide such disclosures, including disclosures related to risks and other investor education materials, as the [Commission](/usc/15/77b.md?p=a-5) shall, by rule, determine appropriate;
  - (4) ensure that each investor—
    - (A) reviews investor-education information, in accordance with standards established by the [Commission](/usc/15/77b.md?p=a-5), by rule;
    - (B) positively affirms that the investor understands that the investor is risking the loss of the entire investment, and that the investor could bear such a loss; and
    - (C) answers questions demonstrating—
      - (i) an understanding of the level of risk generally applicable to investments in startups, emerging businesses, and small [issuers](/usc/15/77b.md?p=a-4);
      - (ii) an understanding of the risk of illiquidity; and
      - (iii) an understanding of such other matters as the [Commission](/usc/15/77b.md?p=a-5) determines appropriate, by rule;
  - (5) take such measures to reduce the risk of fraud with respect to such transactions, as established by the [Commission](/usc/15/77b.md?p=a-5), by rule, including obtaining a background and [securities](/usc/15/77b.md?p=a-1) enforcement regulatory history check on each officer, director, and [person](/usc/15/77b.md?p=a-2) holding more than 20 percent of the outstanding equity of every [issuer](/usc/15/77b.md?p=a-4) whose [securities](/usc/15/77b.md?p=a-1) are offered by such [person](/usc/15/77b.md?p=a-2);
  - (6) not later than 21 days prior to the first day on which [securities](/usc/15/77b.md?p=a-1) are sold to any investor (or such other period as the [Commission](/usc/15/77b.md?p=a-5) may establish), make available to the [Commission](/usc/15/77b.md?p=a-5) and to potential investors any information provided by the [issuer](/usc/15/77b.md?p=a-4) pursuant to [subsection (b)](#b);
  - (7) ensure that all offering proceeds are only provided to the [issuer](/usc/15/77b.md?p=a-4) when the aggregate capital raised from all investors is equal to or greater than a target offering amount, and allow all investors to cancel their commitments to invest, as the [Commission](/usc/15/77b.md?p=a-5) shall, by rule, determine appropriate;
  - (8) make such efforts as the [Commission](/usc/15/77b.md?p=a-5) determines appropriate, by rule, to ensure that no investor in a 12-month period has purchased [securities](/usc/15/77b.md?p=a-1) offered pursuant to [section 77d(6)](/usc/15/77d.md)[^1] of this title that, in the aggregate, from all [issuers](/usc/15/77b.md?p=a-4), exceed the investment limits set forth in [section 77d(6)(B)](/usc/15/77d.md)[^1] of this title;
  - (9) take such steps to protect the privacy of information collected from investors as the [Commission](/usc/15/77b.md?p=a-5) shall, by rule, determine appropriate;
  - (10) not compensate promoters, finders, or lead generators for providing the broker or funding portal with the personal identifying information of any potential investor;
  - (11) prohibit its directors, officers, or partners (or any [person](/usc/15/77b.md?p=a-2) occupying a similar status or performing a similar function) from having any financial interest in an [issuer](/usc/15/77b.md?p=a-4) using its services; and
  - (12) meet such other requirements as the [Commission](/usc/15/77b.md?p=a-5) may, by rule, prescribe, for the protection of investors and in the public interest.
- (b) **Requirements for issuers—** For purposes of [section 77d(6)](/usc/15/77d.md)[^1] of this title, an [issuer](/usc/15/77b.md?p=a-4) who [offers](/usc/15/77b.md?p=a-3) or [sells](/usc/15/77b.md?p=a-3) [securities](/usc/15/77b.md?p=a-1) shall—
  - (1) file with the [Commission](/usc/15/77b.md?p=a-5) and provide to investors and the relevant broker or funding portal, and make available to potential investors—
    - (A) the name, legal status, physical address, and website address of the [issuer](/usc/15/77b.md?p=a-4);
    - (B) the names of the directors and officers (and any [persons](/usc/15/77b.md?p=a-2) occupying a similar status or performing a similar function), and each [person](/usc/15/77b.md?p=a-2) holding more than 20 percent of the shares of the [issuer](/usc/15/77b.md?p=a-4);
    - (C) a description of the business of the [issuer](/usc/15/77b.md?p=a-4) and the anticipated business plan of the [issuer](/usc/15/77b.md?p=a-4);
    - (D) a description of the financial condition of the [issuer](/usc/15/77b.md?p=a-4), including, for offerings that, together with all other offerings of the [issuer](/usc/15/77b.md?p=a-4) under [section 77d(6)](/usc/15/77d.md)[^1] of this title within the preceding 12-month period, have, in the aggregate, target offering amounts of—
      - (i) $100,000 or less—
        - (I) the income tax returns filed by the [issuer](/usc/15/77b.md?p=a-4) for the most recently completed year (if any); and
        - (II) financial statements of the [issuer](/usc/15/77b.md?p=a-4), which shall be certified by the principal executive officer of the [issuer](/usc/15/77b.md?p=a-4) to be true and complete in all material respects;
      - (ii) more than $100,000, but not more than $500,000, financial statements reviewed by a public accountant who is independent of the [issuer](/usc/15/77b.md?p=a-4), using professional standards and procedures for such review or standards and procedures established by the [Commission](/usc/15/77b.md?p=a-5), by rule, for such purpose; and
      - (iii) more than $500,000 (or such other amount as the [Commission](/usc/15/77b.md?p=a-5) may establish, by rule), audited financial statements;
    - (E) a description of the stated purpose and intended use of the proceeds of the offering sought by the [issuer](/usc/15/77b.md?p=a-4) with respect to the target offering amount;
    - (F) the target offering amount, the deadline to reach the target offering amount, and regular updates regarding the progress of the [issuer](/usc/15/77b.md?p=a-4) in meeting the target offering amount;
    - (G) the price to the public of the [securities](/usc/15/77b.md?p=a-1) or the method for determining the price, provided that, prior to sale, each investor shall be provided in writing the final price and all required disclosures, with a reasonable opportunity to rescind the commitment to [purchase](/usc/15/77b.md?p=a-18) the [securities](/usc/15/77b.md?p=a-1);
    - (H) a description of the ownership and capital structure of the [issuer](/usc/15/77b.md?p=a-4), including—
      - (i) terms of the [securities](/usc/15/77b.md?p=a-1) of the [issuer](/usc/15/77b.md?p=a-4) being offered and each other class of [security](/usc/15/77b.md?p=a-1) of the [issuer](/usc/15/77b.md?p=a-4), including how such terms may be modified, and a summary of the differences between such [securities](/usc/15/77b.md?p=a-1), including how the rights of the [securities](/usc/15/77b.md?p=a-1) being offered may be materially limited, diluted, or qualified by the rights of any other class of [security](/usc/15/77b.md?p=a-1) of the [issuer](/usc/15/77b.md?p=a-4);
      - (ii) a description of how the exercise of the rights held by the principal shareholders of the [issuer](/usc/15/77b.md?p=a-4) could negatively impact the purchasers of the [securities](/usc/15/77b.md?p=a-1) being offered;
      - (iii) the name and ownership level of each existing shareholder who owns more than 20 percent of any class of the [securities](/usc/15/77b.md?p=a-1) of the [issuer](/usc/15/77b.md?p=a-4);
      - (iv) how the [securities](/usc/15/77b.md?p=a-1) being offered are being valued, and examples of methods for how such [securities](/usc/15/77b.md?p=a-1) may be valued by the [issuer](/usc/15/77b.md?p=a-4) in the future, including during subsequent corporate actions; and
      - (v) the risks to purchasers of the [securities](/usc/15/77b.md?p=a-1) relating to minority ownership in the [issuer](/usc/15/77b.md?p=a-4), the risks associated with corporate actions, including additional issuances of shares, a sale of the [issuer](/usc/15/77b.md?p=a-4) or of assets of the [issuer](/usc/15/77b.md?p=a-4), or transactions with related parties; and
    - (I) such other information as the [Commission](/usc/15/77b.md?p=a-5) may, by rule, prescribe, for the protection of investors and in the public interest;
  - (2) not advertise the terms of the offering, except for notices which direct investors to the funding portal or broker;
  - (3) not compensate or commit to compensate, directly or indirectly, any [person](/usc/15/77b.md?p=a-2) to promote its offerings through communication channels provided by a broker or funding portal, without taking such steps as the [Commission](/usc/15/77b.md?p=a-5) shall, by rule, require to ensure that such [person](/usc/15/77b.md?p=a-2) clearly discloses the receipt, past or prospective, of such compensation, upon each instance of such promotional communication;
  - (4) not less than annually, file with the [Commission](/usc/15/77b.md?p=a-5) and provide to investors reports of the results of operations and financial statements of the [issuer](/usc/15/77b.md?p=a-4), as the [Commission](/usc/15/77b.md?p=a-5) shall, by rule, determine appropriate, subject to such exceptions and termination dates as the [Commission](/usc/15/77b.md?p=a-5) may establish, by rule; and
  - (5) comply with such other requirements as the [Commission](/usc/15/77b.md?p=a-5) may, by rule, prescribe, for the protection of investors and in the public interest.
- (c) **Liability for material misstatements and omissions—**
  - (1) **Actions authorized—**
    - (A) **In general—** Subject to [paragraph (2)](#c-2), a [person](/usc/15/77b.md?p=a-2) who [purchases](/usc/15/77b.md?p=a-18) a [security](/usc/15/77b.md?p=a-1) in a transaction exempted by the provisions of [section 77d(6)](/usc/15/77d.md)[^1] of this title may bring an action against an [issuer](/usc/15/77b.md?p=a-4) described in [paragraph (2)](#c-2), either at law or in equity in any court of competent jurisdiction, to recover the consideration paid for such [security](/usc/15/77b.md?p=a-1) with interest thereon, less the amount of any income received thereon, upon the tender of such [security](/usc/15/77b.md?p=a-1), or for damages if such [person](/usc/15/77b.md?p=a-2) no longer owns the [security](/usc/15/77b.md?p=a-1).
    - (B) **Liability—** An action brought under this paragraph shall be subject to the provisions of [section 77l(b)](/usc/15/77l.md?p=b) of this title and [section 77m of this title](/usc/15/77m.md), as if the liability were created under [section 77l(a)(2)](/usc/15/77l.md?p=a-2) of this title.
  - (2) **Applicability—** An [issuer](/usc/15/77b.md?p=a-4) shall be liable in an action under [paragraph (1)](#c-1), if the [issuer](/usc/15/77b.md?p=a-4)—
    - (A) by the use of any means or instruments of transportation or communication in [interstate commerce](/usc/15/77b.md?p=a-7) or of the mails, by any means of any [written](/usc/15/77b.md?p=a-9) or oral communication, in the offering or sale of a [security](/usc/15/77b.md?p=a-1) in a transaction exempted by the provisions of [section 77d(6)](/usc/15/77d.md)[^1] of this title, makes an untrue statement of a material fact or omits to [state](/usc/15/15g.md?p=2) a material fact required to be stated or necessary in order to make the statements, in the light of the circumstances under which they were made, not misleading, provided that the purchaser did not know of such untruth or omission; and
    - (B) does not sustain the burden of proof that such [issuer](/usc/15/77b.md?p=a-4) did not know, and in the exercise of reasonable care could not have known, of such untruth or omission.
  - (3) **Definition—** As used in this subsection, the term “[issuer](/usc/15/77b.md?p=a-4)” includes any [person](/usc/15/77b.md?p=a-2) who is a director or partner of the [issuer](/usc/15/77b.md?p=a-4), and the principal executive officer or officers, principal financial officer, and controller or principal accounting officer of the [issuer](/usc/15/77b.md?p=a-4) (and any [person](/usc/15/77b.md?p=a-2) occupying a similar status or performing a similar function) that [offers](/usc/15/77b.md?p=a-3) or [sells](/usc/15/77b.md?p=a-3) a [security](/usc/15/77b.md?p=a-1) in a transaction exempted by the provisions of [section 77d(6)](/usc/15/77d.md)[^1] of this title, and any [person](/usc/15/77b.md?p=a-2) who [offers](/usc/15/77b.md?p=a-3) or [sells](/usc/15/77b.md?p=a-3) the [security](/usc/15/77b.md?p=a-1) in such offering.
- (d) **Information available to States—** The [Commission](/usc/15/77b.md?p=a-5) shall make, or shall cause to be made by the relevant broker or funding portal, the information described in [subsection (b)](#b) and such other information as the [Commission](/usc/15/77b.md?p=a-5), by rule, determines appropriate, available to the [securities](/usc/15/77b.md?p=a-1) [commission](/usc/15/77b.md?p=a-5) (or any agency or office performing like functions) of each [State](/usc/15/15g.md?p=2) and [territory](/usc/15/77b.md?p=a-6) of the United States and the District of Columbia.
- (e) **Restrictions on sales—** [Securities](/usc/15/77b.md?p=a-1) issued pursuant to a transaction described in [section 77d(6)](/usc/15/77d.md)[^1] of this title—
  - (1) may not be transferred by the purchaser of such [securities](/usc/15/77b.md?p=a-1) during the 1-year period beginning on the date of [purchase](/usc/15/77b.md?p=a-18), unless such [securities](/usc/15/77b.md?p=a-1) are transferred—
    - (A) to the [issuer](/usc/15/77b.md?p=a-4) of the [securities](/usc/15/77b.md?p=a-1);
    - (B) to an [accredited investor](/usc/15/77b.md?p=a-15);
    - (C) as part of an offering registered with the [Commission](/usc/15/77b.md?p=a-5); or
    - (D) to a member of the family of the purchaser or the equivalent, or in connection with the death or divorce of the purchaser or other similar circumstance, in the discretion of the [Commission](/usc/15/77b.md?p=a-5); and
  - (2) shall be subject to such other limitations as the [Commission](/usc/15/77b.md?p=a-5) shall, by rule, establish.
- (f) **Applicability—** [Section 77d(6)](/usc/15/77d.md)[^1] of this title shall not apply to transactions involving the [offer](/usc/15/77b.md?p=a-3) or sale of [securities](/usc/15/77b.md?p=a-1) by any [issuer](/usc/15/77b.md?p=a-4) that—
  - (1) is not organized under and subject to the laws of a [State](/usc/15/15g.md?p=2) or [territory](/usc/15/77b.md?p=a-6) of the United States or the District of Columbia;
  - (2) is subject to the requirement to file reports pursuant to [section 78m of this title](/usc/15/78m.md) or [section 78o(d)](/usc/15/78o.md?p=d) of this title;
  - (3) is an investment company, as defined in [section 80a–3 of this title](/usc/15/80a–3.md), or is excluded from the definition of investment company by [section 80a–3(b) of this title](/usc/15/80a–3.md?p=b) or [section 80a–3(c) of this title](/usc/15/80a–3.md?p=c); or
  - (4) the [Commission](/usc/15/77b.md?p=a-5), by rule or regulation, determines appropriate.
- (g) **Rule of construction—** Nothing in this section or [section 77d(6)](/usc/15/77d.md)[^1] of this title shall be construed as preventing an [issuer](/usc/15/77b.md?p=a-4) from raising capital through methods not described under [section 77d(6)](/usc/15/77d.md)[^1] of this title.
- (h) **Certain calculations—**
  - (1) **Dollar amounts—** Dollar amounts in [section 77d(6)](/usc/15/77d.md)[^1] of this title and [subsection (b)](#b) of this section shall be adjusted by the [Commission](/usc/15/77b.md?p=a-5) not less frequently than once every 5 years, by notice published in the Federal Register to reflect any change in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics.
  - (2) **Income and net worth—** The income and net worth of a natural [person](/usc/15/77b.md?p=a-2) under [section 77d(6)(B)](/usc/15/77d.md)[^1] of this title shall be calculated in accordance with any rules of the [Commission](/usc/15/77b.md?p=a-5) under this subchapter regarding the calculation of the income and net worth, respectively, of an [accredited investor](/usc/15/77b.md?p=a-15).

## Footnotes

[^1]: See References in Text note below.
[^2]: So in original. Two pars. (a)(80) of section 78c have been enacted.

## Source credit

(May 27, 1933, ch. 38, title I, § 4A, as added Pub. L. 112–106, title III, § 302(b), Apr. 5, 2012, 126 Stat. 315.)

## Notes

### Editorial Notes

### References in Text

Section 77d(6) of this title, referred to in text, was redesignated section 77d(a)(6) of this title by Pub. L. 112–106, title II, § 201(b)(1), (c)(1), Apr. 5, 2012, 126 Stat. 314.