I 

116TH CONGRESS 

2D SESSION H. R. 7889 

To apply the Truth in Lending Act to small business financing, to regulate 

brokers and require the licensing of brokers, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JULY 30, 2020 

Ms. VELA ́ZQUEZ introduced the following bill; which was referred to the 

Committee on Financial Services 

A BILL 

To apply the Truth in Lending Act to small business financing, to regulate brokers and require the licensing of 

brokers, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Small Business Lend5 ing Disclosure and Broker Regulation Act of 2020’’. 


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1 TITLE I—SMALL BUSINESS 

2 FINANCING 

3 SEC. 101. APPLICATION OF THE TRUTH IN LENDING TO 

4 SMALL BUSINESS FINANCING. 

5 (a) IN GENERAL.—The Truth in Lending Act (15 

6 U.S.C. 1601 et seq.) is amended by adding at the end 

7 the following: 

8 ‘‘CHAPTER 6—SMALL BUSINESS 

9 FINANCING 

‘‘191. Definitions. 

‘‘192. Application of this title to small business financing. 

‘‘193. Additional disclosures. 

‘‘194. Restrictions on double-dipping. 

‘‘195. Additional provisions. 

10 ‘‘§ 191. Definitions 

11 ‘‘In this chapter: 

12 ‘‘(1) CLOSED-END COMMERCIAL CREDIT.—The 

13 term ‘closed-end commercial credit’— 

14 ‘‘(A) means a closed-end extension of cred15 it, secured or unsecured, including financing 

16 with an established principal amount and in17 cluding equipment financing that does not meet 

18 the definition of a lease under the Uniform 

19 Commercial Code (U.C.C.—§ 2A–103(j)) the 

20 proceeds of which the recipient does not intend 

21 to use primarily for personal, family or house22 hold purposes; and 


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1 ‘‘(B) includes financing with an established 

2 principal amount and duration. 

3 ‘‘(2) CONSUMER FINANCIAL PRODUCT OR SERV4 ICE.—The term ‘consumer financial product or serv5 ice’ has the meaning given that term under section 

6 1002 of the Consumer Financial Protection Act of 

7 2010. 

8 ‘‘(3) DIRECTOR.—The term ‘Director’ means 

9 the Director of the Bureau. 

10 ‘‘(4) FACTORING.—The term ‘factoring’ means 

11 a transaction that includes an agreement to pur12 chase, transfer, or sell a legally enforceable claim for 

13 payment held by a recipient for goods the recipient 

14 has supplied or services the recipient has rendered 

15 that have been ordered but for which payment has 

16 not yet been made. 

17 ‘‘(5) FINANCE CHARGE.— 

18 ‘‘(A) IN GENERAL.—The term ‘finance 

19 charge’ means the cost of financing as a dollar 

20 amount, and includes any charge payable di21 rectly or indirectly by the recipient of the fi22 nancing and imposed directly or indirectly by 

23 the provider of the financing as an incident to 

24 or a condition of the extension of financing. 


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1 ‘‘(B) CALCULATION IN OPEN-END COM2 MERCIAL CREDIT PLANS.—In any open-end 

3 commercial credit plan, the finance charge shall 

4 be computed assuming the maximum amount of 

5 credit available to the recipient, in each case, is 

6 drawn and repaid at the minimum rate. 

7 ‘‘(C) CALCULATION IN FACTORING TRANS8 ACTIONS.—In any factoring transaction, the fi9 nance charge shall include the discount taken 

10 on the face value of the accounts receivable. 

11 ‘‘(D) CALCULATION IN LEASE FINANCING

12 TRANSACTIONS.—In any lease financing trans13 action, the finance charge shall include the sum 

14 of the lease payments and, if there is a fixed15 price purchase option or a purchase option with 

16 a price that can be calculated at the time of 

17 disclosure, the purchase price listed in the con18 tract that the lessee may pay to acquire the 

19 leased goods at the end of the lease, minus— 

20 ‘‘(i) if the finance company selects, 

21 manufactures, or supplies the goods to be 

22 leased, the price that the finance company 

23 would sell the goods in a cash transaction; 

24 or 


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1 ‘‘(ii) if the finance company does not 

2 select, manufacture, or supply the goods to 

3 be leased, the price the finance company 

4 will pay to acquire the property to be 

5 leased. 

6 ‘‘(E) INCLUSION OF CERTAIN PREPAY7 MENT CHARGES.— 

8 ‘‘(i) IN GENERAL.—If, as a condition 

9 of obtaining the offered commercial financ10 ing the provider requires the recipient to 

11 pay off the balance of an existing loan or 

12 advance from the same provider, any pre13 payment charge or penalty required to be 

14 paid on the existing financing shall be in15 cluded as a financing charge. 

16 ‘‘(ii) TREATMENT WHEN REPAYMENT

17 AMOUNT IS CALCULATED AS A FIXED

18 AMOUNT.—For purposes of clause (i), for 

19 financing for which the total repayment 

20 amount is calculated as a fixed amount, 

21 the prepayment charge is equal to the 

22 original finance charge multiplied by the 

23 required prepayment amount as a percent24 age of the total repayment amount, minus 

25 any portion of the total repayment amount 


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1 forgiven by the provider at the time of pre2 payment. 

3 ‘‘(6) OPEN-END COMMERCIAL CREDIT PLAN.— 

4 The term ‘open-end commercial credit plan’ means 

5 any small business financing provided by a person 

6 under a plan in which the person reasonably con7 templates repeat transactions, which prescribes the 

8 terms of such transactions, and which provides for 

9 a finance charge which may be computed from time 

10 to time on the outstanding unpaid balance. 

11 ‘‘(7) PROVIDER.—The term ‘provider’ mean a 

12 person who offers or provides small business financ13 ing. 

14 ‘‘(8) RECIPIENT.—The term ‘recipient’ means a 

15 person who is presented an offer of small business 

16 financing. 

17 ‘‘(9) SALES-BASED FINANCING.—The term 

18 ‘sales-based financing’— 

19 ‘‘(A) means a transaction where there is 

20 an extension of financing to a recipient that is 

21 repaid by the recipient, over time, as a percent22 age of sales or revenue, in which the payment 

23 amount may increase or decrease according to 

24 the volume of sales made or revenue received by 

25 the recipient; and 


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1 ‘‘(B) includes transactions with a ‘true-up 

2 mechanism’. 

3 ‘‘(10) SMALL BUSINESS.—The term ‘small busi4 ness’ has the meaning given the term ‘small-business 

5 concern’ under section 3 of the Small Business Act 

6 (15 U.S.C. 632). 

7 ‘‘(11) SMALL BUSINESS FINANCING.—The term 

8 ‘small business financing’— 

9 ‘‘(A) means any line of credit, closed-end 

10 commercial credit, sales-based financing, or 

11 other non-equity obligation or alleged obligation 

12 of a partnership, corporation, cooperative, asso13 ciation, or other entity that is $2,500,000 or 

14 less; and 

15 ‘‘(B) does not include any obligation or al16 leged obligation of an individual that is pri17 marily for personal, family, or household pur18 poses. 

19 ‘‘(12) SPECIFIC OFFER.—The term ‘specific 

20 offer’ means the specific terms of small business fi21 nancing, including price or amount, that is quoted to 

22 a recipient, based on information obtained from, or 

23 about the recipient, which, if accepted by a recipient, 

24 shall be binding on the provider, as applicable, subVerDate Sep 11 2014 04:30 Aug 22, 2020 Jkt 099200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H7889.IH H7889

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1 ject to any specific requirements stated in such 

2 terms. 

3 ‘‘§ 192. Application of this title to small business fi4 nancing 

5 ‘‘(a) IN GENERAL.—This title shall apply to small 

6 business financing made to a small business to the same 

7 extent as this title applies to extensions of credit made 

8 to a consumer. 

9 ‘‘(b) RULEMAKING.—The Director shall issue such 

10 rules as may be required to carry out this chapter. 

11 ‘‘(c) BUREAU AUTHORITY.—For purposes of carrying 

12 out this chapter and other Federal laws, including the 

13 Consumer Financial Protection Act of 2010, the Bureau 

14 shall have the same authority with respect to small busi15 ness financing as the Bureau has with respect to consumer 

16 financial products and services. 

17 ‘‘§ 193. Additional disclosures 

18 ‘‘(a) IN GENERAL.—Any provider offering small busi19 ness financing to a small business shall disclose the fol20 lowing pieces of information to a recipient at the time of 

21 extending a specific offer for small business financing: 

22 ‘‘(1) FINANCING AMOUNT.—The total amount 

23 to be paid to the small business, taking into account 

24 all fees and charges to be withheld at disbursement. 

25 ‘‘(2) ANNUAL PERCENTAGE RATE.— 


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1 ‘‘(A) CLOSED-END COMMERCIAL CREDIT.— 

2 With respect to closed-end commercial credit, 

3 the annual percentage rate, using only the 

4 words ‘annual percentage rate’ or the abbrevia5 tion ‘APR’, expressed as a yearly rate, inclusive 

6 of any fees and finance charges that cannot be 

7 avoided by a recipient. 

8 ‘‘(B) OPEN-END COMMERCIAL CREDIT

9 PLANS.—With respect to open-end commercial 

10 credit plans, the annual percentage rate, using 

11 only the words ‘annual percentage rate’ or the 

12 abbreviation ‘APR’, expressed as a nominal 

13 yearly rate, inclusive of any fees and finance 

14 charges that cannot be avoided by a recipient, 

15 based on the maximum amount of credit avail16 able to the recipient and the term resulting 

17 from making the minimum required payments 

18 term as disclosed. 

19 ‘‘(C) SALES-BASED FINANCING.— 

20 ‘‘(i) IN GENERAL.—With respect to 

21 sales-based financing, the estimated annual 

22 percentage rate, using the words ‘annual 

23 percentage rate’ or the abbreviation ‘APR’, 

24 expressed as a yearly rate, inclusive of any 

25 fees and finance charges, based on the estiVerDate Sep 11 2014 04:30 Aug 22, 2020 Jkt 099200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H7889.IH H7889

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1 mated term of repayment and the pro2 jected periodic payment amounts. 

3 ‘‘(ii) CALCULATION OF CERTAIN PAY4 MENT AMOUNTS.—The estimated term of 

5 repayment and the projected periodic pay6 ment amounts shall be calculated based on 

7 the projection of the recipient’s sales, 

8 called the projected sales volume. 

9 ‘‘(iii) CALCULATION OF PROJECTED

10 SALES VOLUMES.—For purposes of clause 

11 (ii), the projected sales volume may be cal12 culated— 

13 ‘‘(I) according to a method de14 fined by the Director based on the re15 cipient’s historical sales volume over a 

16 defined period of time that is used for 

17 all sales-based financing transactions 

18 by that provider; or 

19 ‘‘(II) by another method defined 

20 by the provider and approved by the 

21 Director, with ongoing monitoring by 

22 the Director for accuracy based on a 

23 comparison of the annual percentage 

24 rate as disclosed to the recipient and 


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1 as calculated retrospectively upon re2 payment of the financing. 

3 ‘‘(D) FACTORING.— 

4 ‘‘(i) IN GENERAL.—With respect to 

5 factoring, the estimated annual percentage 

6 rate, using that term. 

7 ‘‘(ii) CALCULATION.—To calculate the 

8 estimated annual percentage rate under 

9 clause (i)— 

10 ‘‘(I) the purchase amount shall 

11 be considered the financing amount; 

12 ‘‘(II) the purchase amount minus 

13 the total cost of financing shall be 

14 considered the payment amount; and 

15 ‘‘(III) the term is established by 

16 the payment due date of the receiv17 ables. 

18 ‘‘(iii) ALTERNATE METHOD TO ESTI19 MATE TERM.—Notwithstanding clause 

20 (ii)(III), a provider may estimate the term 

21 for a factoring transaction as the average 

22 payment period, its historical data over a 

23 period not to exceed the previous twelve 

24 months, concerning payment invoices paid 


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1 by the party owing the accounts receivable 

2 in question. 

3 ‘‘(3) PAYMENT AMOUNT.—With respect to 

4 small business financing other than factoring— 

5 ‘‘(A) for payment amounts that are fixed— 

6 ‘‘(i) the payment amounts and fre7 quency (e.g., daily, weekly, monthly); and 

8 ‘‘(ii) if the term is longer than one 

9 month and payment frequency is other 

10 than monthly, the average total monthly 

11 payment amount; or 

12 ‘‘(B) for payment amounts that are vari13 able— 

14 ‘‘(i) a full payment schedule or a de15 scription of the method used to calculate 

16 the amounts and frequency of payments; 

17 and 

18 ‘‘(ii) if the term is longer than one 

19 month, the estimated average total month20 ly payment amount. 

21 ‘‘(4) TERM.—For financing other than fac22 toring, the term of the small business financing, ei23 ther in months or in years, or, if the term is not 

24 fixed, the estimated term, calculated using the same 


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1 assumptions used to calculate the estimated annual 

2 percentage rate. 

3 ‘‘(5) FINANCE CHARGE.—The finance charge of 

4 the small business financing, broken down to show 

5 what expenses and fees are included in the finance 

6 charge. 

7 ‘‘(6) PREPAYMENT COST OR SAVINGS.—In the 

8 event that a recipient elects to pay off or refinance 

9 the small business financing prior to full repayment, 

10 the provider must disclose— 

11 ‘‘(A) whether the recipient would be re12 quired to pay any finance charges other than 

13 interest accrued since the recipient’s last pay14 ment; and 

15 ‘‘(B) if the recipient is required to pay the 

16 finance charges described under subparagraph 

17 (A), the percentage of any unpaid portion of 

18 the finance charge and maximum dollar amount 

19 the recipient could be required to pay; and 

20 ‘‘(C) whether the recipient would be re21 quired to pay any additional fees not already in22 cluded in the finance charge. 

23 ‘‘(7) COLLATERAL REQUIREMENTS.—Any col24 lateral requirement that will be imposed on the small 


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1 business in connection with the small business fi2 nancing. 

3 ‘‘(b) FORM OF DISCLOSURES.— 

4 ‘‘(1) IN GENERAL.—Disclosures made pursuant 

5 to this section shall be in writing, at the time a spe6 cific offer is made, and in a manner that is clear, 

7 conspicuous, complete, and allows the small business 

8 to compare the range of small business financing op9 tions that the small business may be considering. 

10 ‘‘(2) PROMINENCE OF DISCLOSURES.—In mak11 ing any disclosure pursuant to this section, the dis12 closures required under paragraphs (1), (2), and (3) 

13 of subsection (a) shall be displayed most promi14 nently. 

15 ‘‘§ 194. Restrictions on double-dipping 

16 ‘‘When a lender of small business financing refi17 nances or modifies an existing loan with a fixed fee as 

18 the primary financing charge, the lender may not charge 

19 a fee on the small business’s outstanding principal unless 

20 there is a tangible benefit to the small business. 

21 ‘‘§ 195. Additional provisions 

22 ‘‘(a) RULE OF CONSTRUCTION.—Nothing in this 

23 chapter may be construed to prevent a provider from pro24 viding or disclosing additional information on a small busi25 ness financing being offered to a recipient, provided howVerDate Sep 11 2014 04:30 Aug 22, 2020 Jkt 099200 PO 00000 Frm 00014 Fmt 6652 Sfmt 6201 E:\BILLS\H7889.IH H7889

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1 ever, that such additional information may not be dis2 closed as part of the disclosure required by this chapter. 

3 ‘‘(b) USE OF TERMS.— 

4 ‘‘(1) RATE.—If other metrics of financing cost 

5 are disclosed or used in the application process of a 

6 small business financing, these metrics shall not be 

7 presented as a ‘rate’ if they are not the annual in8 terest rate or the annual percentage rate. 

9 ‘‘(2) INTEREST.—The term ‘interest’, when 

10 used to describe a percentage rate to a recipient or 

11 potential recipient, shall only be used to describe 

12 annualized percentage rates, such as the annual in13 terest rate. 

14 ‘‘(c) REQUIREMENT TO STATE APR.—When a pro15 vider states in writing a rate of finance charge or a financ16 ing amount to a recipient during an application process 

17 for small business financing, the provider shall also state 

18 the annual percentage rate or, in the case of sales-based 

19 financing or factoring, the estimated annual percentage 

20 rate, with equal or greater prominence, using the term ‘an21 nual percentage rate’ or the abbreviation ‘APR’.’’. 

22 (b) CLERICAL AMENDMENT.—The table of chapters 

23 for the Truth in Lending Act is amended by adding at 

24 the end the following: 

‘‘6. SMALL BUSINESS FINANCING ... 191’’. 


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1 (c) RULEMAKING DEADLINE.—Not later than the 

2 end of the 24-month period beginning on the date of en3 actment of this Act, the Director of the Bureau of Con4 sumer Financial Protection shall issue final rules to carry 

5 out the amendments made by this section. 

6 (d) EFFECTIVE DATE.—Chapter 6 of the Truth in 

7 Lending Act, as added by subsection (a), shall take effect 

8 after the end of the 36-month period beginning on the date 

9 of enactment of this Act. 

10 TITLE II—REGULATION OF 

11 BROKERS 

12 SEC. 201. OFFICE OF BROKER REGULATION. 

13 Section 1013 of the Consumer Financial Protection 

14 Act of 2010 (12 U.S.C. 5493) is amended by adding at 

15 the end the following: 

16 ‘‘(i) OFFICE OF BROKER REGULATION.—There is es17 tablished in the Bureau an Office of Broker Regulation, 

18 which shall be responsible for carrying out section 1018.’’. 

19 SEC. 202. REGULATION OF BROKERS. 

20 (a) IN GENERAL.—The Consumer Financial Protec21 tion Act of 2010 (12 U.S.C. 5481 et seq.) is amended— 

22 (1) by redesignating section 1018 as section 

23 1019; and 

24 (2) by inserting after section 1017 the fol25 lowing: 


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1 ‘‘SEC. 1018. REGULATION OF BROKERS. 

2 ‘‘(a) DEFINITIONS.—In this section: 

3 ‘‘(1) BROKER.—The term ‘broker’ means a nat4 ural person who— 

5 ‘‘(A) is not a creditor or purchaser; and 

6 ‘‘(B) solicits and presents offers of com7 mercial financing on behalf of a third party. 

8 ‘‘(2) DIRECTOR.—The term ‘Director’ means 

9 the Director of the Bureau of Consumer Financial 

10 Protection. 

11 ‘‘(3) STATE.—The term ‘State’ means each of 

12 the several States, the District of Columbia, and the 

13 territories and possessions of the United States. 

14 ‘‘(4) OTHER TERMS.—The terms ‘small busi15 ness’ and ‘small business financing’ have the mean16 ing given those terms under section 193 of the 

17 Truth in Lending Act. 

18 ‘‘(b) REGULATIONS.— 

19 ‘‘(1) IN GENERAL.—A broker shall, in facili20 tating financing offered by a third-party lender for 

21 a small business— 

22 ‘‘(A) provide the small business with a dis23 closure containing the information described 

24 under paragraph (2); and 

25 ‘‘(B) educate the small business on each 

26 small business financing option and ensure that 


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1 the small business reasonably understands the 

2 cost and terms of the small business financing 

3 as well as the pros and cons of the small busi4 ness financing decision before the small busi5 ness enters into a contract for such small busi6 ness financing. 

7 ‘‘(2) CONTENTS OF DISCLOSURE.—Each disclo8 sure required under paragraph (1) shall include: 

9 ‘‘(A) A list of all small business financing 

10 options for which the small business qualifies 

11 through the broker’s services and, with respect 

12 to each such small business financing option, 

13 the disclosures described under section 193 of 

14 the Truth in Lending Act. 

15 ‘‘(B) The lowest annual percentage rate 

16 option. 

17 ‘‘(C) All the lenders to which the broker 

18 has sent or will send small business financing 

19 applications on the small business’s behalf. 

20 ‘‘(D) All compensation that will be paid to 

21 the broker, including— 

22 ‘‘(i) all charges that will be paid di23 rectly or indirectly by the small business; 

24 and 


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1 ‘‘(ii) whether such compensation paid 

2 to the broker will be paid up front or fi3 nanced through the life of the small busi4 ness financing. 

5 ‘‘(E) All conflicts of interest the broker 

6 may have. 

7 ‘‘(F) A break down and explanation of the 

8 broker’s fee structure, including— 

9 ‘‘(i) any financial or economic interest 

10 the broker has in offering a product to the 

11 small business; and 

12 ‘‘(ii) whether the broker will receive a 

13 higher fee for brokering a certain small 

14 business financing over another small busi15 ness financing. 

16 ‘‘(3) PUBLIC DISCLOSURE OF PREVIOUS BOR17 ROWER RESULTS.— 

18 ‘‘(A) WEBSITE DISCLOSURE.—Each broker 

19 shall post clearly and prominently on the 

20 website of the broker the anonymous and aggre21 gated results of previous small business bor22 rowers who have obtained small business fi23 nancing through the broker’s services, in terms 

24 of annual percentage rate and financing prod25 uct. 


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1 ‘‘(B) BROKERS WITHOUT WEBSITES.— 

2 Notwithstanding subparagraph (A), if a broker 

3 does not have a website, the broker shall dis4 close the information described in subparagraph 

5 (A) in a paper format, upon request by any 

6 small business borrower. 

7 ‘‘(4) SMALL BUSINESS COMPLAINTS WITH RE8 SPECT TO BROKERS.—The Director shall— 

9 ‘‘(A) collect complaints from small busi10 nesses with respect to their experiences with 

11 brokers; and 

12 ‘‘(B) make such complaints available to the 

13 public on the website of the Bureau of Con14 sumer Financial Protection. 

15 ‘‘(5) RESTRICTION ON BEST INTEREST

16 CLAIMS.—A broker that is paid higher fees with cer17 tain lenders, small business financing types, or 

18 through terms other than the size of the small busi19 ness financing may not state that the broker is act20 ing in the best interest of the potential small busi21 ness borrower. 

22 ‘‘(6) PROHIBITION ON STEERING.—A loan 

23 originator or broker may not steer a small business 

24 to small business financing that is not in the small 

25 business’s best interest. 


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1 ‘‘(7) RESTRICTIONS ON CERTAIN FEES.— 

2 ‘‘(A) NO FEE IF PARTIES DO NOT COME TO

3 AN AGREEMENT.—A broker may not charge a 

4 small business any fee if— 

5 ‘‘(i) the broker is unable to find the 

6 small business financing; or 

7 ‘‘(ii) the small business chooses not to 

8 accept financing through the broker’s serv9 ices. 

10 ‘‘(B) REPLACEMENT OF EXISTING FINANC11 ING.—If a broker or third-party lender offers 

12 an existing small business customer new financ13 ing, neither the broker nor the third-party lend14 er may charge the small business a new financ15 ing charge for the financing being replaced. 

16 ‘‘(c) BROKER LICENSING AND ENFORCEMENT.— 

17 ‘‘(1) STATE BROKER LICENSING.—A person 

18 may only perform the function of a broker in a State 

19 if the person is licensed as a broker— 

20 ‘‘(A) with respect to a State that has a 

21 covered broker licensing law, by the State; or 

22 ‘‘(B) with respect to a State that does not 

23 have a covered broker licensing law, by the Bu24 reau. 


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1 ‘‘(2) COVERED BROKER LICENSING LAW.—With 

2 respect to a State, the term ‘covered broker licensing 

3 law’ means a State law that the Director determines 

4 meets the following requirements: 

5 ‘‘(A) LICENSING.—The law provides for a 

6 process to license brokers operating in the 

7 State. 

8 ‘‘(B) PROHIBITION ON UNLICENSED BRO9 KERS.—The law prohibits any person from act10 ing as a broker in the State unless such person 

11 is licensed by the State as a broker. 

12 ‘‘(C) PROHIBITION ON LICENSING CERTAIN

13 INDIVIDUALS.—The law prohibits licensing an 

14 individual as a broker if such individual— 

15 ‘‘(i) has had a State license revoked 

16 for cause in any State; 

17 ‘‘(ii) has had a Federal license re18 voked for cause; or 

19 ‘‘(iii) has been convicted of any crime 

20 involving lying, deceit, or misappropriation 

21 of the truth. 

22 ‘‘(D) LIMITATION ON BROKER EMPLOY23 EES.—The law prohibits a broker from employ24 ing any individual, other than a clerical emVerDate Sep 11 2014 04:30 Aug 22, 2020 Jkt 099200 PO 00000 Frm 00022 Fmt 6652 Sfmt 6201 E:\BILLS\H7889.IH H7889

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1 ployee, who is described under clause (i), (ii), or 

2 (iii) of subparagraph (C). 

3 ‘‘(E) EXAMINATION.—The law requires a 

4 licensed broker to undergo State audits and 

5 provides for examination of the broker by State 

6 regulators. 

7 ‘‘(F) ENFORCEMENT.—With respect to 

8 any violation of a State law or regulation in 

9 connection with performing the duties of a 

10 broker, the law provides for— 

11 ‘‘(i) an initial warning being given to 

12 the broker; 

13 ‘‘(ii) a cure period offered to the 

14 broker during which the broker can cure 

15 the violation; and 

16 ‘‘(iii) if the broker fails to cure the 

17 violation, civil or criminal penalties which 

18 include— 

19 ‘‘(I) the revocation of any broker 

20 license granted to the violator; and 

21 ‘‘(II) a ban on the violator being 

22 granted any other professional license 

23 for a period of not less than 5 years. 

24 ‘‘(G) PUBLIC AVAILABILITY OF DISCIPLI25 NARY ACTIONS.—The law requires the State 


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1 agency in charge of licensing brokers to main2 tain a website that lists all disciplinary actions 

3 taken against brokers. 

4 ‘‘(3) BUREAU BROKER LICENSING.—Not later 

5 than the end of the 12-month period beginning on 

6 the date of enactment of this section, the Director 

7 shall establish a Federal broker licensing program 

8 that, to the extent practicable, meets the require9 ments for a covered broker licensing law described 

10 under paragraph (2). 

11 ‘‘(4) EFFECTIVE DATE.— 

12 ‘‘(A) IN GENERAL.—Subsection (a) shall 

13 take effect after the end of the 2-year period 

14 beginning on the date of enactment of this sec15 tion. 

16 ‘‘(B) SAFE HARBOR.—Notwithstanding 

17 subsection (a), a person acting as broker in a 

18 State on the date of enactment of this section 

19 who has applied for a broker license under a 

20 State covered broker licensing law (or, with re21 spect to a State that does not have a covered 

22 broker licensing law, with the Federal broker li23 censing program established under paragraph 

24 (3)) may continue to act as a broker in such 

25 State while the application is pending. 


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1 ‘‘(d) RULEMAKING.—The Director may issue such 

2 rules as may be necessary to carry out this section. 

3 ‘‘(e) PENALTIES.— 

4 ‘‘(1) CIVIL PENALTIES.—Any person who vio5 lates a provision of this section shall— 

6 ‘‘(A) be fined not less than $5,000 and not 

7 more than $72,000; 

8 ‘‘(B) disgorge any funds or other property 

9 obtained in connection with such violation; 

10 ‘‘(C) in the case of an individual licensed 

11 as a broker by the Bureau, have such license 

12 suspended for 1 year; and 

13 ‘‘(D) in the case of an individual licensed 

14 as a broker by the Bureau who has violated a 

15 provision of this section previously, have such li16 cense permanently revoked. 

17 ‘‘(2) CRIMINAL PENALTY.—Any person who vio18 lates a provision of this section in an egregious man19 ner shall be fined not more than $5,000,000 or im20 prisoned not more than 20 years, or both. 

21 ‘‘(3) LIABILITY FOR EMPLOYER.—Any person 

22 employing a broker at the time the broker violates 

23 a provision of this section shall— 

24 ‘‘(A) be fined not more than $853,062; 


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1 ‘‘(B) disgorge any funds or other property 

2 obtained in connection with such violation; 

3 ‘‘(C) be prohibited from taking any action 

4 involving small business lending or the broker5 age industry for not more than 30 business 

6 days; and 

7 ‘‘(D) in the case of a violation that was in 

8 an egregious manner, be prohibited from taking 

9 any action involving small business lending or 

10 the brokerage industry for more than 30 busi11 ness days, which may include a permanent pro12 hibition on the person taking any action involv13 ing small business lending or the brokerage in14 dustry. 

15 ‘‘(4) FEDERAL BAR FOR STATE VIOLATORS.—If 

16 an individual has their State broker license revoked 

17 by reason of violating a State law or regulation in 

18 connection with performing the duties of a broker— 

19 ‘‘(A) any professional license granted to 

20 the individual by the Federal Government shall 

21 be terminated; and 

22 ‘‘(B) the individual may not receive a pro23 fessional license from the Federal Government 

24 before the end of the 5-year period beginning 

25 on the date of such revocation. 


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1 ‘‘(5) STATE ENFORCEMENT AUTHORITY.—An 

2 action to enforce a violation of this section may also 

3 be brought by a State attorney general in any appro4 priate United States district court, or any other 

5 court of competent jurisdiction.’’. 

6 (b) CLERICAL AMENDMENT.—The table of contents 

7 in section 1(b) of the Dodd-Frank Wall Street Reform and 

8 Consumer Protection Act is amended by striking the item 

9 relating to section 1017 and inserting the following: 

‘‘Sec. 1017. Regulation of brokers. 

‘‘Sec. 1018. Effective date.’’. 

Æ 


kjohnson on DSK79L0C42PROD with BILLS