H. R. 3606—11 
‘‘SEC. 4A. REQUIREMENTS WITH RESPECT TO CERTAIN SMALL TRANS-
ACTIONS. 
‘‘(a) REQUIREMENTS ON INTERMEDIARIES.—A person acting as 
an intermediary in a transaction involving the offer or sale of 
securities for the account of others pursuant to section 4(6) shall— 
‘‘(1) register with the Commission as— 
‘‘(A) a broker; or 
‘‘(B) a funding portal (as defined in section 3(a)(80) 
of the Securities Exchange Act of 1934); 
‘‘(2) register with any applicable self-regulatory organiza-
tion (as defined in section 3(a)(26) of the Securities Exchange 
Act of 1934); 
‘‘(3) provide such disclosures, including disclosures related 
to risks and other investor education materials, as the Commis-
sion shall, by rule, determine appropriate; 
‘‘(4) ensure that each investor— 
‘‘(A) reviews investor-education information, in accord-
ance with standards established by the Commission, by 
rule; 
‘‘(B) positively affirms that the investor understands 
that the investor is risking the loss of the entire invest-
ment, 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; 
‘‘(ii) an understanding of the risk of illiquidity; 
and 
‘‘(iii) an understanding of such other matters as 
the Commission determines appropriate, by rule; 
‘‘(5) take such measures to reduce the risk of fraud with 
respect to such transactions, as established by the Commission, 
by rule, including obtaining a background and securities 
enforcement regulatory history check on each officer, director, 
and person holding more than 20 percent of the outstanding 
equity of every issuer whose securities are offered by such 
person; 
‘‘(6) not later than 21 days prior to the first day on which 
securities are sold to any investor (or such other period as 
the Commission may establish), make available to the Commis-
sion and to potential investors any information provided by 
the issuer pursuant to subsection (b); 
‘‘(7) ensure that all offering proceeds are only provided 
to the issuer when the aggregate capital raised from all inves-
tors is equal to or greater than a target offering amount, 
and allow all investors to cancel their commitments to invest, 
as the Commission shall, by rule, determine appropriate; 
‘‘(8) make such efforts as the Commission determines appro-
priate, by rule, to ensure that no investor in a 12-month period 
has purchased securities offered pursuant to section 4(6) that, 
in the aggregate, from all issuers, exceed the investment limits 
set forth in section 4(6)(B); 
‘‘(9) take such steps to protect the privacy of information 
collected from investors as the Commission shall, by rule, deter-
mine appropriate;
H. R. 3606—12 
‘‘(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 occupying a similar status or performing a similar func-
tion) from having any financial interest in an issuer using 
its services; and 
‘‘(12) meet such other requirements as the Commission 
may, by rule, prescribe, for the protection of investors and 
in the public interest. 
‘‘(b) REQUIREMENTS FOR ISSUERS.—For purposes of section 4(6), 
an issuer who offers or sells securities shall— 
‘‘(1) file with the Commission 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; 
‘‘(B) the names of the directors and officers (and any 
persons occupying a similar status or performing a similar 
function), and each person holding more than 20 percent 
of the shares of the issuer; 
‘‘(C) a description of the business of the issuer and 
the anticipated business plan of the issuer; 
‘‘(D) a description of the financial condition of the 
issuer, including, for offerings that, together with all other 
offerings of the issuer under section 4(6) within the pre-
ceding 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 
for the most recently completed year (if any); and 
‘‘(II) financial statements of the issuer, which 
shall be certified by the principal executive officer 
of the issuer 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, using 
professional standards and procedures for such review 
or standards and procedures established by the 
Commission, by rule, for such purpose; and 
‘‘(iii) more than $500,000 (or such other amount 
as the Commission 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 
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 in meeting the target offering 
amount; 
‘‘(G) the price to the public of the securities 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 oppor-
tunity to rescind the commitment to purchase the securi-
ties;
H. R. 3606—13 
‘‘(H) a description of the ownership and capital struc-
ture of the issuer, including— 
‘‘(i) terms of the securities of the issuer being 
offered and each other class of security of the issuer, 
including how such terms may be modified, and a 
summary of the differences between such securities, 
including how the rights of the securities being offered 
may be materially limited, diluted, or qualified by the 
rights of any other class of security of the issuer; 
‘‘(ii) a description of how the exercise of the rights 
held by the principal shareholders of the issuer could 
negatively impact the purchasers of the securities being 
offered; 
‘‘(iii) the name and ownership level of each existing 
shareholder who owns more than 20 percent of any 
class of the securities of the issuer; 
‘‘(iv) how the securities being offered are being 
valued, and examples of methods for how such securi-
ties may be valued by the issuer in the future, 
including during subsequent corporate actions; and 
‘‘(v) the risks to purchasers of the securities 
relating to minority ownership in the issuer, the risks 
associated with corporate actions, including additional 
issuances of shares, a sale of the issuer or of assets 
of the issuer, or transactions with related parties; and 
‘‘(I) such other information as the Commission 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 to promote its offerings through commu-
nication channels provided by a broker or funding portal, with-
out taking such steps as the Commission shall, by rule, require 
to ensure that such person 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 and 
provide to investors reports of the results of operations and 
financial statements of the issuer, as the Commission shall, 
by rule, determine appropriate, subject to such exceptions and 
termination dates as the Commission may establish, by rule; 
and 
‘‘(5) comply with such other requirements as the Commis-
sion 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), a person 
who purchases a security in a transaction exempted by 
the provisions of section 4(6) may bring an action against 
an issuer described in paragraph (2), either at law or 
in equity in any court of competent jurisdiction, to recover 
the consideration paid for such security with interest 
thereon, less the amount of any income received thereon, 
upon the tender of such security, or for damages if such 
person no longer owns the security.