I 
116TH CONGRESS 
1ST SESSION H. R. 3768 
To amend the Securities Exchange Act of 1934 to create a safe harbor 
for finders and private placement brokers, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
JULY 16, 2019 
Mr. BUDD introduced the following bill; which was referred to the Committee 
on Financial Services 
A BILL 
To amend the Securities Exchange Act of 1934 to create 
a safe harbor for finders and private placement brokers, 
and for other purposes. 
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 ‘‘Unlocking Capital for 
Small Businesses Act of 2019’’. 
SEC. 2. SAFE HARBORS FOR PRIVATE PLACEMENT BRO-
KERS AND FINDERS. 
(a) IN GENERAL.—Section 15 of the Securities Ex-
change Act of 1934 (15 U.S.C. 78o) is amended by adding 
at the end the following: 
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‘‘(p) PRIVATE PLACEMENT BROKER SAFE HAR-
BOR.— 
‘‘(1) 
REGISTRATION
REQUIREMENTS.—Not 
later than 180 days after the date of the enactment 
of this subsection the Commission shall promulgate 
regulations with respect to private placement brokers 
that are no more stringent than those imposed on 
funding portals. 
‘‘(2) NATIONAL
SECURITIES
ASSOCIATIONS.— 
Not later than 180 days after the date of the enact-
ment of this subsection the Commission shall pro-
mulgate regulations that require the rules of any na-
tional securities association to allow a private place-
ment broker to become a member of such national 
securities association subject to reduced membership 
requirements consistent with this subsection. 
‘‘(3) DISCLOSURES REQUIRED.—Before effect-
ing a transaction, a private placement broker shall 
disclose clearly and conspicuously, in writing, to all 
parties to the transaction as a result of the broker’s 
activities— 
‘‘(A) that the broker is acting as a private 
placement broker; 
‘‘(B) the amount of any payment or antici-
pated payment for services rendered as a pri-
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vate placement broker in connection with such 
transaction; 
‘‘(C) the person to whom any such pay-
ment is made; 
‘‘(D) any beneficial interest in the issuer, 
direct or indirect, of the private placement 
broker, of a member of the immediate family of 
the private placement broker, of an associated 
person of the private placement broker, or of a 
member of the immediate family of such associ-
ated person. 
‘‘(4) 
PRIVATE
PLACEMENT
BROKER
DE-
FINED.—In this subsection, the term ‘private place-
ment broker’ means a person that— 
‘‘(A) receives transaction-based compensa-
tion— 
‘‘(i) for effecting a transaction by— 
‘‘(I) introducing an issuer of se-
curities and a buyer of such securities 
in connection with the sale of a busi-
ness effected as the sale of securities; 
or 
‘‘(II) introducing an issuer of se-
curities and a buyer of such securities 
in connection with the placement of 
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securities in transactions that are ex-
empt from registration requirements 
under the Securities Act of 1933; and 
‘‘(ii) that is not with respect to— 
‘‘(I) a class of publicly traded se-
curities; 
‘‘(II) the securities of an invest-
ment company (as defined in section 3 
of the Investment Company Act of 
1940); or 
‘‘(III) a variable or equity-in-
dexed annuity or other variable or eq-
uity-indexed life insurance product; 
‘‘(B) with respect to a transaction for 
which such transaction-based compensation is 
received— 
‘‘(i) does not handle or take posses-
sion of the funds or securities; and 
‘‘(ii) does not engage in an activity 
that requires registration as an investment 
adviser under State or Federal law; and 
‘‘(C) is not a finder as defined under sub-
section (q). 
‘‘(q) FINDER SAFE HARBOR.— 
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‘‘(1) NONREGISTRATION.—A finder is exempt 
from the registration requirements of this Act. 
‘‘(2) NATIONAL SECURITIES ASSOCIATIONS.—A 
finder shall not be required to become a member of 
any national securities association. 
‘‘(3) FINDER DEFINED.—In this subsection, the 
term ‘finder’ means a person described in para-
graphs (A) and (B) of subsection (p)(4) that— 
‘‘(A) receives transaction-based compensa-
tion of equal to or less than $500,000 in any 
calendar year; 
‘‘(B) receives transaction-based compensa-
tion in connection with transactions that result 
in a single issuer selling securities valued at 
equal to or less than $15 million in any cal-
endar year; 
‘‘(C) receives transaction-based compensa-
tion in connection with transactions that result 
in any combination of issuers selling securities 
valued at equal to or less than $30 million in 
any calendar year; or 
‘‘(D) receives transaction-based compensa-
tion in connection with fewer than 16 trans-
actions that are not part of the same offering 
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or are otherwise unrelated in any calendar 
year.’’. 
(b) VALIDITY OF CONTRACTS WITH REGISTERED 
PRIVATE PLACEMENT BROKERS AND FINDERS.—Section 
29 of the Securities Exchange Act (15 U.S.C. 78cc) is 
amended by adding at the end the following: 
‘‘(d) Subsection (b) shall not apply to a contract 
made for a transaction if— 
‘‘(1) the transaction is one in which the issuer 
engaged the services of a broker or dealer that is not 
registered under this Act with respect to such trans-
action; 
‘‘(2) such issuer received a self-certification 
from such broker or dealer certifying that such 
broker or dealer is a registered private placement 
broker under section 15(p) or a finder under section 
15(q); and 
‘‘(3) the issuer either did not know that such 
self-certification was false or did not have a reason-
able basis to believe that such self-certification was 
false.’’. 
(c) REMOVAL OF PRIVATE PLACEMENT BROKERS 
FROM DEFINITIONS OF BROKER.— 
(1) RECORDS AND REPORTS ON MONETARY IN-
STRUMENTS TRANSACTIONS.—Section 5312 of title 
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31, United States Code, is amended in subsection 
(a)(2)(G) by inserting ‘‘with the exception of a pri-
vate placement broker as defined in section 15(p)(4) 
of the Securities Exchange Act of 1934 (15 U.S.C. 
78o(p)(4))’’ before the semicolon at the end. 
(2) SECURITIES EXCHANGE ACT OF 1934.—Sec-
tion 3(a)(4) of the Securities Exchange Act of 1934 
(15 U.S.C. 78c(a)(4)) is amended by adding at the 
end the following: 
‘‘(G) PRIVATE PLACEMENT BROKERS.—A 
private placement broker as defined in section 
15(p)(4) is not a broker for the purposes of this 
Act.’’. 
SEC. 3. LIMITATIONS ON STATE LAW. 
Section 15(i) of the Securities Exchange Act of 1934 
(15 U.S.C. 78o(i)) is amended— 
(1) by redesignating paragraph (3) as para-
graph (4); and 
(2) by inserting after paragraph (2) the fol-
lowing: 
‘‘(3) PRIVATE PLACEMENT BROKERS AND FIND-
ERS.— 
‘‘(A) IN GENERAL.—No State or political 
subdivision thereof may enforce any law, rule, 
regulation, or other administrative action that 
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imposes greater registration, audit, financial 
recordkeeping, or reporting requirements on a 
private placement broker or finder than those 
that are required under subsections (p) and (q), 
respectively. 
‘‘(B) DEFINITION
OF
STATE.—For pur-
poses of this paragraph, the term ‘State’ in-
cludes the District of Columbia and each terri-
tory of the United States.’’. 
Æ 
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