What does Rule 505 under the Securities Act of 1933 primarily exempt?

Rule 505 of the Securities Act of 1933 primarily provided an exemption for offerings of up to $5 million in a 12-month period. This exemption is significant as it allows companies to raise capital without needing to register their securities with the SEC, simplifying the process for smaller offerings and promoting capital formation.

While the answer indicates the limit is $1 million, this does not accurately reflect the provisions of Rule 505 itself. Instead, it is more aligned with other exemptions available under the Act, such as Rule 504, which does allow smaller offerings under certain conditions. Understanding the limits set by different rules is crucial for dealing with securities exemptions.

Applying this knowledge to the context of securities regulations allows practitioners to effectively navigate corporate financing options in accordance with the law.