I 
116TH CONGRESS 
1ST SESSION 
H. R. 609 
To amend the Securities Exchange Act of 1934 to exempt from registration 
brokers performing services in connection with the transfer of ownership 
of smaller privately held companies. 
IN THE HOUSE OF REPRESENTATIVES 
JANUARY 16, 2019 
Mr. HUIZENGA (for himself, Mr. POSEY, and Mr. HIGGINS of New York) in-
troduced the following bill; which was referred to the Committee on Fi-
nancial Services 
A BILL 
To amend the Securities Exchange Act of 1934 to exempt 
from registration brokers performing services in connec-
tion with the transfer of ownership of smaller privately 
held companies. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Small Business Merg-
ers, Acquisitions, Sales, and Brokerage Simplification Act 
of 2019’’. 
VerDate Sep 11 2014 
19:57 Feb 04, 2019
Jkt 089200
PO 00000
Frm 00001
Fmt 6652
Sfmt 6201
E:\BILLS\H609.IH
H609
pbinns on DSK79D2C42PROD with BILLS
SEC. 2. REGISTRATION EXEMPTION FOR MERGER AND AC-
QUISITION BROKERS. 
Section 15(b) of the Securities Exchange Act of 1934 
(15 U.S.C. 78o(b)) is amended by adding at the end the 
following: 
‘‘(13) REGISTRATION EXEMPTION FOR MERGER 
AND ACQUISITION BROKERS.— 
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), an M&A broker shall be ex-
empt from registration under this section. 
‘‘(B) EXCLUDED
ACTIVITIES.—An M&A 
broker is not exempt from registration under 
this paragraph if such broker does any of the 
following: 
‘‘(i) Directly or indirectly, in connec-
tion 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 transaction. 
‘‘(ii) Engages on behalf of an issuer in 
a public offering of any class of securities 
that is registered, or is required to be reg-
istered, with the Commission under section 
12 or with respect to which the issuer files, 
or is required to file, periodic information, 
VerDate Sep 11 2014 
19:57 Feb 04, 2019
Jkt 089200
PO 00000
Frm 00002
Fmt 6652
Sfmt 6201
E:\BILLS\H609.IH
H609
pbinns on DSK79D2C42PROD with BILLS
documents, and reports under subsection 
(d). 
‘‘(iii) Engages on behalf of any party 
in a transaction involving a shell company, 
other than a business combination related 
shell company. 
‘‘(iv) Directly, or indirectly through 
any of its affiliates, provides financing re-
lated to the transfer of ownership of an eli-
gible privately held company. 
‘‘(v) Assists any party to obtain fi-
nancing from an unaffiliated third party 
without— 
‘‘(I) complying with all other ap-
plicable laws in connection with such 
assistance, including, if applicable, 
Regulation T (12 C.F.R. 220 et seq.); 
and 
‘‘(II) disclosing any compensation 
in writing to the party. 
‘‘(vi) 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 
VerDate Sep 11 2014 
19:57 Feb 04, 2019
Jkt 089200
PO 00000
Frm 00003
Fmt 6652
Sfmt 6201
E:\BILLS\H609.IH
H609
pbinns on DSK79D2C42PROD with BILLS
written consent from both parties to the 
joint representation. 
‘‘(vii) Facilitates a transaction with a 
group of buyers formed with the assistance 
of the M&A broker to acquire the eligible 
privately held company. 
‘‘(viii) Engages in a transaction in-
volving the transfer of ownership of an eli-
gible privately held company to a passive 
buyer or group of passive buyers. For pur-
poses of the preceding sentence, a buyer 
that is actively involved in managing the 
acquired company is not a passive buyer, 
regardless of whether such buyer is itself 
owned by passive beneficial owners. 
‘‘(ix) Binds a party to a transfer of 
ownership of an eligible privately held com-
pany. 
‘‘(C) 
DISQUALIFICATIONS.—An 
M&A 
broker is not exempt from registration under 
this paragraph if such broker is subject to— 
‘‘(i) suspension or revocation of reg-
istration under paragraph (4); 
‘‘(ii) a statutory disqualification de-
scribed in section 3(a)(39); 
VerDate Sep 11 2014 
19:57 Feb 04, 2019
Jkt 089200
PO 00000
Frm 00004
Fmt 6652
Sfmt 6201
E:\BILLS\H609.IH
H609
pbinns on DSK79D2C42PROD with BILLS
‘‘(iii) a disqualification under the 
rules adopted by the Commission under 
section 926 of the Investor Protection and 
Securities Reform Act of 2010 (15 U.S.C. 
77d note); or 
‘‘(iv) a final order described in para-
graph (4)(H). 
‘‘(D) RULE OF CONSTRUCTION.—Nothing 
in this paragraph shall be construed to limit 
any other authority of the Commission to ex-
empt any person, or any class of persons, from 
any provision of this title, or from any provision 
of any rule or regulation thereunder. 
‘‘(E) DEFINITIONS.—In this paragraph: 
‘‘(i) 
BUSINESS
COMBINATION
RE-
LATED SHELL COMPANY.—The term ‘busi-
ness combination related shell company’ 
means a shell company that is formed by 
an entity that is not a shell company— 
‘‘(I) solely for the purpose of 
changing the corporate domicile of 
that entity solely within the United 
States; or 
‘‘(II) solely for the purpose of 
completing a business combination 
VerDate Sep 11 2014 
19:57 Feb 04, 2019
Jkt 089200
PO 00000
Frm 00005
Fmt 6652
Sfmt 6201
E:\BILLS\H609.IH
H609
pbinns on DSK79D2C42PROD with BILLS
transaction (as defined under section 
230.165(f) of title 17, Code of Fed-
eral Regulations) among one or more 
entities other than the company itself, 
none of which is a shell company. 
‘‘(ii) CONTROL.—The term ‘control’ 
means the power, directly or indirectly, to 
direct the management or policies of a 
company, whether through ownership of 
securities, by contract, or otherwise. There 
is a presumption of control for any person 
who— 
‘‘(I) is a director, general part-
ner, member or manager of a limited 
liability company, or corporate officer 
of a corporation or limited liability 
company, and exercises executive re-
sponsibility (or has similar status or 
functions); 
‘‘(II) has the right to vote 25 
percent or more of a class of voting 
securities or the power to sell or direct 
the sale of 25 percent or more of a 
class of voting securities; or 
VerDate Sep 11 2014 
19:57 Feb 04, 2019
Jkt 089200
PO 00000
Frm 00006
Fmt 6652
Sfmt 6201
E:\BILLS\H609.IH
H609
pbinns on DSK79D2C42PROD with BILLS
‘‘(III) in the case of a partner-
ship or limited liability company, has 
the right to receive upon dissolution, 
or has contributed, 25 percent or 
more of the capital. 
‘‘(iii) ELIGIBLE
PRIVATELY
HELD 
COMPANY.—The term ‘eligible privately 
held company’ means a privately held com-
pany that meets both of the following con-
ditions: 
‘‘(I) The company does not have 
any class of securities registered, or 
required to be registered, with the 
Commission under section 12 or with 
respect to which the company files, or 
is required to file, periodic informa-
tion, documents, and reports under 
subsection (d). 
‘‘(II) 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 transaction, the com-
pany meets either or both of the fol-
lowing conditions (determined in ac-
VerDate Sep 11 2014 
19:57 Feb 04, 2019
Jkt 089200
PO 00000
Frm 00007
Fmt 6652
Sfmt 6201
E:\BILLS\H609.IH
H609
pbinns on DSK79D2C42PROD with BILLS
cordance with the historical financial 
accounting records of the company): 
‘‘(aa) The earnings of the 
company before interest, taxes, 
depreciation, and amortization 
are less than $25,000,000. 
‘‘(bb) The gross revenues of 
the 
company 
are 
less 
than 
$250,000,000. 
For purposes of this subclause, the 
Commission may by rule modify the 
dollar figures if the Commission deter-
mines that such a modification is nec-
essary or appropriate in the public in-
terest or for the protection of inves-
tors. 
‘‘(iv) M&A BROKER.—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 com-
pany, regardless of whether the broker acts 
on behalf of a seller or buyer, through the 
purchase, sale, exchange, issuance, repur-
VerDate Sep 11 2014 
19:57 Feb 04, 2019
Jkt 089200
PO 00000
Frm 00008
Fmt 6652
Sfmt 6201
E:\BILLS\H609.IH
H609
pbinns on DSK79D2C42PROD with BILLS