,i #aacth ,,congress #ast ,session ,h4 ,r4 #bbgd ,,in ,,the ,,house ,,of ,,representatives ,june #f1 #bjac ,mr4 ,huizenga of ,michigan 7for himself1 ,mr4 ,higgins1 and ,mr4 ,posey7 introduced the following bill2 which was referred to the ,committee on ,financial ,services ,a ,,bill ,to amend the ,securities ,exchange ,act of #aicd to provide for a notice-filing registration procedure for brokers performing services in connection with the transfer of ownership of smaller privately held companies and to provide for regulation appropriate to the limited scope of the activities of such brokers4 #a4 ,short title ,this ,act may be cited as the ,small ,business ,mergers1 ,acquisitions1 ,sales1 and ,brokerage ,simplification ,act of #bjac4 #b4 ,merger and acquisition brokers 7a7 ,in general ,section #ae7;b7 of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gho7b77 is amended by adding at the end the following3 7#ac7 ,merger and acquisition brokers 7,a7 ,registration by notice-filing ,notwithstanding paragraphs 7#a7 and 7#b71 an ,m,a broker may register for purposes of this section by filing with the ,commission an electronic notice in such form and containing such information concerning the ,m,a broker and any persons associated with the ,m,a broker as the ,commission may by rule prescribe as necessary or appropriate in the public interest or for the protection of investors4 7,b7 ,effectiveness of registration 7i7 ,immediate ,except as provided in clause 7ii71 the registration of an ,m,a broker under subparagraph 7,a7 shall become effective upon receipt by the ,commission of a properly completed notice from the ,m,a broker under such subparagraph4 7ii7 ,commission approval required ,the registration of an ,m,a broker under subparagraph 7,a7 shall not become effective without approval by the ,commission if the ,m,a broker or a person associated with the ,m,a broker is subject to-- 7,i7 suspension or revocation of registration under paragraph 7#d72 7,,ii7 a statutory disqualification 7except that the date of the filing of the notice under subparagraph 7,a7 shall be substituted for the date referred to in section #c7;a77#ci77;,f772 or 7,,iii7 disqualification under the rules adopted by the ,commission under section #ibf of the ,dodd-,frank ,wall ,street ,reform and ,consumer ,protection ,act 7#ae ,u4,s4,c4 #gg;d note7 7except that the date of the filing of the notice under subparagraph 7,a7 shall be substituted for the date referred to in paragraph 7#b77;,a77ii7 of such section74 7,c7 ,updated information ,if the information contained in a notice filed under subparagraph 7,a7 becomes inaccurate or incomplete in any material respect1 the ,m,a broker shall update such information in a form and manner to be specified by the ,commission4 7,d7 ,public availability ,the ,commission shall make publicly available on the website of the ,commission the information provided in a notice filed under subparagraph 7,a71 as updated under subparagraph 7,c74 7,e7 ,disclosure to clients ,the ,commission may require an ,m,a broker registered under subparagraph 7,a7 to deliver to the clients of the ,m,a broker a disclosure document describing the ,m,a broker and the affiliates1 associated persons1 services1 and fees of the ,m,a broker1 any conflicts of interest of the ,m,a broker1 and such other information as the ,commission considers necessary or appropriate in the public interest or for the protection of investors4 7,f7 ,exemptions for ,m,a brokers ,to the extent that the activities of an ,m,a broker registered under subparagraph 7,a7 are within the scope of the activities described in subparagraph 7,k77iii71 the ,m,a broker 7and any persons associated with the ,m,a broker7 shall be exempt from-- 7i7 except as provided in subparagraph 7,g71 the requirements of this ,act that apply to a broker registered1 or required to be registered1 under this subsection 7or to any persons associated with such a broker1 as the case may be72 and 7ii7 the ,securities ,investor ,protection ,act of #aigj 7#ae ,u4,s4,c4 #gh;aaa et seq474 7,g7 ,provisions applicable to ,m,a brokers 7i7 ,in general ,the following provisions shall apply to an ,m,a broker registered under subparagraph 7,a7 7or to any persons associated with the ,m,a broker1 as the case may be73 7,i7 ,this paragraph and paragraphs 7#d71 7#e71 7#f71 and 7#g74 7,,ii7 ,subsection 7a71 paragraphs 7#a77;,a7 and 7#c77;,a7 of subsection 7c71 and subsection 7g74 7,,iii7 ,subsections 7a77#a7 and 7b77#a7 of section #ag4 7ii7 ,tailored application ,in applying subsection 7c77#c77;,a7 of this section and subsections 7a77#a7 and 7b77#a7 of section #ag to ,m,a brokers1 the ,commission shall take into account the nature of the transactions in which ,m,a brokers are involved1 the involvement of the parties to such transactions in such transactions1 and the limited scope of the activities of ,m,a brokers under subparagraph 7,k77iii71 including that ,m,a brokers do not have custody of the funds or securities to be exchanged by the parties to such transactions4 7iii7 ,state law preemption ,subsection 7i77#a7 shall govern the relationship between the requirements applicable to ,m,a brokers under this ,act and the requirements applicable to ,m,a brokers under the law of a ,state or a political subdivision of a ,state4 ,except as provided in such subsection1 this paragraph shall not preempt the law of a ,state or a political subdivision of a ,state applicable to ,m,a brokers4 7,h7 ,excluded activities ,an ,m,a broker may not in reliance on this paragraph do any of the following3 7i7 ,directly or indirectly1 in connection with the transfer of ownership of an eligible privately held company1 receive1 hold1 transmit1 or have custody of the funds or securities to be exchanged by the parties to the transaction4 7ii7 ,engage on behalf of an issuer in a public offering of any class of securities that is registered1 or is required to be registered1 with the ,commission under section #ab or with respect to which the issuer files1 or is required to file1 periodic information1 documents1 and reports under section #ae7;d74 7,i7 ,coordination with the ,states ,in establishing appropriate uniform and consistent standards of training1 experience1 competence1 and other qualifications under paragraph 7#g7 for persons associated with an ,m,a broker1 and in prescribing the form and content of the notice described in subparagraph 7,a71 the ,commission shall cooperate1 coordinate1 and share information with any association composed of duly constituted representatives of ,state governments the primary assignment of which is the regulation of the securities business within such ,states4 7,j7 ,regulations ,not later than #ahj days after the date of the enactment of this paragraph1 the ,commission shall promulgate regulations to-- 7i7 implement and enforce this paragraph2 and 7ii7 codify the interpretative guidance issued by the staff of the ,commission in the no-action letter to ,international ,business ,exchange ,corporation dated ,december #ab1 #aihf1 and in the no-action letter to ,country ,business1 ,inc41 dated ,november #h1 #bjjf1 with respect to circumstances under which registration as a broker under this section is not required4 7,k7 ,definitions ,in this paragraph3 7i7 ,control ,the term control means the power1 directly or indirectly1 to direct the management or policies of a company1 whether through ownership of securities1 by contract1 or otherwise4 ,there is a presumption of control for any person who-- 7,i7 is a director1 general partner1 member or manager of a limited liability company1 or officer exercising executive responsibility 7or has similar status or functions72 7,,ii7 has the right to vote #be percent or more of a class of voting securities or the power to sell or direct the sale of #be percent or more of a class of voting securities2 or 7,,iii7 in the case of a partnership or limited liability company1 has the right to receive upon dissolution1 or has contributed1 #be percent or more of the capital4 7ii7 ,eligible privately held company ,the term eligible privately held company means a company that meets both of the following conditions3 7,i7 ,the company does not have any class of securities registered1 or required to be registered1 with the ,commission under section #ab or with respect to which the company files1 or is required to file1 periodic information1 documents1 and reports under section #ae7;d74 7,,ii7 ,in the fiscal year ending immediately before the fiscal year in which the services of the ,m,a broker are initially engaged with respect to the securities transaction1 the company meets either or both of the following conditions 7determined in accordance with the historical financial accounting records of the company73 7aa7 ,the earnings of the company before interest1 taxes1 depreciation1 and amortization are less than #be1jjj1jjj4 7bb7 ,the gross revenues of the company are less than #bej1jjj1jjj4 7iii7 ,m,a broker ,the term ,m,a broker means a broker engaged in the business of effecting the transfer of ownership of an eligible privately held company1 regardless of whether the broker acts on behalf of a seller or buyer1 through the purchase1 sale1 exchange1 issuance1 repurchase1 or redemption of1 or a business combination involving1 securities or assets of the eligible privately held company1 if the broker reasonably believes that-- 7,i7 upon consummation of the transaction1 any person acquiring securities or assets of the eligible privately held company1 acting alone or in concert1 will control and1 directly or indirectly1 will be active in the management of the eligible privately held company or the business conducted with the assets of the eligible privately held company2 and 7,,ii7 if any person is offered securities in exchange for securities or assets of the eligible privately held company1 such person will1 prior to becoming legally bound to consummate the transaction1 receive or have reasonable access to the most recent year-end balance sheet1 income statement1 statement of changes in financial position1 and statement of owner's equity of the issuer of the securities offered in exchange1 and1 if the financial statements of the issuer are audited1 the related report of the independent auditor1 a balance sheet dated not more than #abj days before the date of the offer1 and information pertaining to the management1 business1 results of operations for the period covered by the foregoing financial statements1 and material loss contingencies of the issuer4 7,l7 ,inflation adjustment 7i7 ,in general ,on the date that is #e years after the ,commission first promulgates final regulations under subparagraph 7,j71 and every #e years thereafter1 each dollar amount in subparagraph 7,k77ii77,,ii7 shall be adjusted by-- 7,i7 dividing the annual value of the ,employment ,cost ,index ,for ,wages and ,salaries1 ,private ,industry ,workers 7or any successor index71 as published by the ,bureau of ,labor ,statistics1 for the calendar year preceding the calendar year in which the adjustment is being made by the annual value of such index 7or successor7 for the calendar year ending ,december #ca1 #bjab2 and 7,,ii7 multiplying such dollar amount by the quotient obtained under subclause 7,i74 7ii7 ,rounding ,each dollar amount determined under clause 7i7 shall be rounded to the nearest multiple of #ajj1jjj4 4 7b7 ,effective date ,paragraph 7#ac7 of section #ae7;b7 of the ,securities ,exchange ,act of #aicd1 as added by subsection 7a71 except subparagraph 7,j7 of such paragraph1 shall take effect on the date that is #ahj days after the date of the enactment of this ,act4