petence, and other qualifications under para-
graph (7) for persons associated with an M&A 
broker, and in prescribing the form and content 
of the notice described in subparagraph (A), the 
Commission shall cooperate, coordinate, and 
share information with any association com-
posed of duly constituted representatives of 
State governments the primary assignment of 
which is the regulation of the securities busi-
ness within such States. 
‘‘(J) REGULATIONS.—Not later than 180 
days after the date of the enactment of this 
paragraph, the Commission shall promulgate 
regulations to— 
‘‘(i) implement and enforce this para-
graph; and 
‘‘(ii) codify the interpretative guidance 
issued by the staff of the Commission in 
the no-action letter to International Busi-
ness Exchange Corporation dated Decem-
ber 12, 1986, and in the no-action letter to 
Country Business, Inc., dated November 8, 
2006, with respect to circumstances under 
which registration as a broker under this 
section is not required. 
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‘‘(K) DEFINITIONS.—In this paragraph: 
‘‘(i) 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 officer exercising 
executive responsibility (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 
‘‘(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. 
‘‘(ii) 
ELIGIBLE
PRIVATELY
HELD 
COMPANY.—The term ‘eligible privately 
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held company’ means a company that 
meets both of the following conditions: 
‘‘(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 
section 15(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-
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. 
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‘‘(bb) The gross revenues of 
the 
company 
are 
less 
than 
$250,000,000. 
‘‘(iii) M&A BROKER.—The term ‘M&A 
broker’ means a broker engaged in the 
business of effecting the transfer of owner-
ship 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, repur-
chase, or redemption of, or a business com-
bination involving, securities or assets of 
the eligible privately held company, if the 
broker reasonably believes that— 
‘‘(I) upon consummation of the 
transaction, any person acquiring se-
curities or assets of the eligible pri-
vately held company, acting alone or 
in concert, will control and, directly or 
indirectly, will be active in the man-
agement of the eligible privately held 
company or the business conducted 
with the assets of the eligible privately 
held company; and 
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‘‘(II) if any person is offered se-
curities in exchange for securities or 
assets of the eligible privately held 
company, such person will, prior to 
becoming legally bound to consum-
mate the transaction, receive or have 
reasonable access to the most recent 
year-end balance sheet, income state-
ment, statement of changes in finan-
cial position, and statement of owner’s 
equity of the issuer of the securities 
offered in exchange, and, if the finan-
cial statements of the issuer are au-
dited, the related report of the inde-
pendent auditor, a balance sheet 
dated not more than 120 days before 
the date of the offer, and information 
pertaining to the management, busi-
ness, results of operations for the pe-
riod covered by the foregoing financial 
statements, and material loss contin-
gencies of the issuer. 
‘‘(L) INFLATION ADJUSTMENT.— 
‘‘(i) IN GENERAL.—On the date that 
is 5 years after the Commission first pro-
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mulgates final regulations under subpara-
graph (J), and every 5 years thereafter, 
each 
dollar 
amount 
in 
subparagraph 
(K)(ii)(II) shall be adjusted by— 
‘‘(I) dividing the annual value of 
the Employment Cost Index For 
Wages and Salaries, Private Industry 
Workers (or any successor index), as 
published by the Bureau of Labor 
Statistics, for the calendar year pre-
ceding the calendar year in which the 
adjustment is being made by the an-
nual value of such index (or suc-
cessor) for the calendar year ending 
December 31, 2012; and 
‘‘(II) multiplying such dollar 
amount by the quotient obtained 
under subclause (I). 
‘‘(ii) 
ROUNDING.—Each 
dollar 
amount determined under clause (i) shall 
be rounded to the nearest multiple of 
$100,000.’’. 
(b) EFFECTIVE DATE.—Paragraph (13) of section 
15(b) of the Securities Exchange Act of 1934, as added 
by subsection (a), except subparagraph (J) of such para-
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