CONGRESSWOMAN ELISE STEFANIK
On Tuesday, January 14, 2014, the House will consider H.R. 2274, the Small Business Mergers, Acquisitions, Sales, and Brokerage Simplification Act, as Amended, under a suspension of the rules. The bill was introduced on June 6, 2013 by Rep. Bill Huizenga (R-MI) and referred to the Committee on Financial Services, which ordered the bill reported as amended, by a vote of 57-0.
H.R. 2274, as amended, amends the Section 15(b) of the Securities Exchange Act of 1934 to exempt Mergers and Acquisitions (M&A) brokers from registration with the Securities Exchange Commission (SEC. A M&A broker is not exempt from registration if the broker: 1) directly or indirectly, in connection with the transfer of ownership of an eligible privately held company, receives, holds, transmits, or has custody of the funds or securities to be exchanged by the parties to the transitions; or 2) engages on behalf of an issuer in a public offering of any class of securities that is registered, or is required to be registered, with the SEC. This bill would apply to M&A deals involving companies with annual earnings of less than $25 million and annual gross revenue of less than $250 million.
 According to the legislation, “the term M&A Broker means a broker, and any person associated with a broker, engaged in the business of effecting securities transactions solely in connection with the transfer of ownership of an eligible privately held company, regardless of whether the broker acts on behalf of a seller or buyer, through the purchase, sale, exchange, issuance, re-purchase, or redemption of, or a business combination involving, securities or assets of the eligible privately held company.”
Currently, M&A brokers are required to register with the SEC and to be members of the Financial Industry Regulatory Authority (FINRA). However, many of the brokers who negotiate deals between small businesses are unaware of this requirement. “Initial registration costs for M&A brokers can run more than $150,000, with annual registration running as high as $75,000.” This legislation is intended to simplify registration in order to lower costs for M&A brokers and the businesses they serve.
CBO estimates that the net budgetary effect of implementing this legislation would be negligible.
For questions or further information contact the GOP Conference at 5-5107.