,i  #aafth ,,congress  #ast ,session    
,h4 ,r4 #fji  ,,in ,,the ,,house ,,of   
,,representatives  ,january #af1 #bjai  
,mr4 ,huizenga 7for himself1 ,mr4       
,posey1 and ,mr4 ,higgins of ,new ,york7
 introduced the following bill2 which   
was referred to the ,committee on       
,financial ,services  ,a ,,bill  ,to    
amend the ,securities ,exchange ,act of 
#aicd to exempt from registration       
brokers performing services in          
connection with the transfer of         
ownership of smaller privately held     
companies4  #a4 ,short title ,this ,act 
may be cited as the ,small ,business    
,mergers1 ,acquisitions1 ,sales1 and    
,brokerage ,simplification ,act of      
#bjai4  #b4 ,registration exemption for 
merger and acquisition brokers ,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 ,registration         
exemption for merger and acquisition    
brokers  7,a7 ,in general ,except as    

provided in subparagraph 7,b71 an ,m,a  
broker shall be exempt from registration
 under this section4  7,b7 ,excluded    
activities ,an ,m,a broker is not exempt
 from registration under this paragraph 
if such broker does any of the          
following3  7i7 ,directly or indirectly1
 in connection with the transfer of     
ownership of an eligible privately held 
company1 receives1 holds1 transmits1 or 
has custody of the funds or securities  
to be exchanged by the parties to the   
transaction4  7ii7 ,engages 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 subsection 7d74  7iii7 ,engages on
 behalf of any party in a transaction   
involving a shell company1 other than a 
business combination related shell      
company4  7iv7 ,directly1 or indirectly 

through any of its affiliates1 provides 
financing related to the transfer of    
ownership of an eligible privately held 
company4  7v7 ,assists any party to     
obtain financing from an unaffiliated   
third party without-- 7,i7 complying    
with all other applicable laws in       
connection with such assistance1        
including1 if applicable1 ,regulation ,t
 7#ab ,c4,f4,r4 #bbj et seq472 and      
7,,ii7 disclosing any compensation in   
writing to the party4  7vi7 ,represents 
both the buyer and the seller in the    
same transaction without providing clear
 written disclosure as to the parties   
the broker represents and obtaining     
written consent from both parties to the
 joint representation4  7vii7           
,facilitates a transaction with a group 
of buyers formed with the assistance of 
the ,m,a broker to acquire the eligible 
privately held company4  7viii7 ,engages
 in a transaction involving the transfer
 of ownership of an eligible privately  
held company to a passive buyer or group

 of passive buyers4 ,for purposes of the
 preceding sentence1 a buyer that is    
actively involved in managing the       
acquired company is not a passive buyer1
 regardless of whether such buyer is    
itself owned by passive beneficial      
owners4  7ix7 ,binds a party to a       
transfer of ownership of an eligible    
privately held company4  7,c7           
,disqualifications ,an ,m,a broker is   
not exempt from registration under this 
paragraph if such broker is subject to--
  7i7 suspension or revocation of       
registration under paragraph 7#d72  7ii7
 a statutory disqualification described 
in section #c7;a77#ci72  7iii7 a        
disqualification under the rules adopted
 by the ,commission under section #ibf  
of the ,investor ,protection and        
,securities ,reform ,act of #bjaj 7#ae  
,u4,s4,c4 #gg;d note72 or  7iv7 a final 
order described in paragraph 7#d77;,h74 
7,d7 ,rule of construction ,nothing in  
this paragraph shall be construed to    
limit any other authority of the        

,commission to exempt any person1 or any
 class of persons1 from any provision of
 this title1 or from any provision of   
any rule or regulation thereunder4  7,e7
 ,definitions ,in this paragraph3  7i7  
,business combination related shell     
company ,the term business combination  
related shell company means a shell     
company that is formed by an entity that
 is not a shell company-- 7,i7 solely   
for the purpose of changing the         
corporate domicile of that entity solely
 within the ,united ,states2 or  7,,ii7 
solely for the purpose of completing a  
business combination transaction 7as    
defined under section #bcj4afe7;f7 of   
title #ag1 ,code of ,federal            
,regulations7 among one or more entities
 other than the company itself1 none of 
which is a shell company4  7ii7 ,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 corporate officer 
of a corporation or limited liability   
company1 and exercises 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  7iii7 ,eligible privately 
held company ,the term eligible         
privately held company means a privately
 held 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 subsection 7d74  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  ,for purposes of    
this subclause1 the ,commission may by  
rule modify the dollar figures if the   
,commission determines that such a      
modification is necessary or appropriate
 in the public interest or for the      
protection of investors4  7iv7 ,m,a     
broker ,the term ,m,a broker means a    
broker1 and any person associated with a

 broker1 engaged in the business of     
effecting securities transactions solely
 in connection with 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 fiscal year-end financial  
statements of the issuer of the         
securities as customarily prepared by   
the management of the issuer in the     
normal course of operations and1 if the 
financial statements of the issuer are  
audited1 reviewed1 or compiled1 any     
related statement by the independent    
accountant1 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  7v7 ,shell company ,the term   
shell company means a company that at   
the time of a transaction with an       
eligible privately held company--  7,i7 
has no or nominal operations2 and       
7,,ii7 has--  7aa7 no or nominal assets2
  7bb7 assets consisting solely of cash 

and cash equivalents2 or  7cc7 assets   
consisting of any amount of cash and    
cash equivalents and nominal other      
assets4  7,f7 ,inflation adjustment  7i7
 ,in general ,on the date that is #e    
years after the date of the enactment of
 this paragraph1 and every #e years     
thereafter1 each dollar amount in       
subparagraph 7,e77iii77,,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  #c4 ,effective date ,this 
,act and any amendment made by this ,act
 shall take effect on the date that is  
#ij days after the date of the enactment
 of this ,act4