Us Congress 2023-2024 Regular Session

Us Congress House Bill HB2590 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	I
2	2	118THCONGRESS
3	3	1
4	4	STSESSION H. R. 2590
5	5	To amend the Securities Exchange Act of 1934 to create a safe harbor
6	6	for finders and private placement brokers, and for other purposes.
7	7	IN THE HOUSE OF REPRESENTATIVES
8	8	APRIL13, 2023
9	9	Mr. G
10	10	ARBARINOintroduced the following bill; which was referred to the
11	11	Committee on Financial Services
12	12	A BILL
13	13	To amend the Securities Exchange Act of 1934 to create
14	14	a safe harbor for finders and private placement brokers,
15	15	and for other purposes.
16	16	Be it enacted by the Senate and House of Representa-1
17	17	tives of the United States of America in Congress assembled, 2
18	18	SECTION 1. SHORT TITLE. 3
19	19	This Act may be cited as the ‘‘Unlocking Capital for 4
20	20	Small Businesses Act of 2023’’. 5
21	21	SEC. 2. SAFE HARBORS FOR PRIVATE PLACEMENT BRO-6
22	22	KERS AND FINDERS. 7
23	23	(a) I
24	24	NGENERAL.—Section 15 of the Securities Ex-8
25	25	change Act of 1934 (15 U.S.C. 78o) is amended by adding 9
26	26	at the end the following: 10
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30	30	‘‘(p) PRIVATEPLACEMENTBROKERSAFEHAR-1
31	31	BOR.— 2
32	32	‘‘(1) R
33	33	EGISTRATION REQUIREMENTS .—Not 3
34	34	later than 180 days after the date of the enactment 4
35	35	of this subsection the Commission shall promulgate 5
36	36	regulations with respect to private placement brokers 6
37	37	that are no more stringent than those imposed on 7
38	38	funding portals. 8
39	39	‘‘(2) N
40	40	ATIONAL SECURITIES ASSOCIATIONS .— 9
41	41	Not later than 180 days after the date of the enact-10
42	42	ment of this subsection the Commission shall pro-11
43	43	mulgate regulations that require the rules of any na-12
44	44	tional securities association to allow a private place-13
45	45	ment broker to become a member of such national 14
46	46	securities association subject to reduced membership 15
47	47	requirements consistent with this subsection. 16
48	48	‘‘(3) D
49	49	ISCLOSURES REQUIRED .—Before effect-17
50	50	ing a transaction, a private placement broker shall 18
51	51	disclose clearly and conspicuously, in writing, to all 19
52	52	parties to the transaction as a result of the broker’s 20
53	53	activities— 21
54	54	‘‘(A) that the broker is acting as a private 22
55	55	placement broker; 23
56	56	‘‘(B) the amount of any payment or antici-24
57	57	pated payment for services rendered as a pri-25
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61	61	vate placement broker in connection with such 1
62	62	transaction; 2
63	63	‘‘(C) the person to whom any such pay-3
64	64	ment is made; and 4
65	65	‘‘(D) any beneficial interest in the issuer, 5
66	66	direct or indirect, of the private placement 6
67	67	broker, of a member of the immediate family of 7
68	68	the private placement broker, of an associated 8
69	69	person of the private placement broker, or of a 9
70	70	member of the immediate family of such associ-10
71	71	ated person. 11
72	72	‘‘(4) P
73	73	RIVATE PLACEMENT BROKER DE -12
74	74	FINED.—In this subsection, the term ‘private place-13
75	75	ment broker’ means a person that— 14
76	76	‘‘(A) receives transaction-based compensa-15
77	77	tion— 16
78	78	‘‘(i) for effecting a transaction by— 17
79	79	‘‘(I) introducing an issuer of se-18
80	80	curities and a buyer of such securities 19
81	81	in connection with the sale of a busi-20
82	82	ness effected as the sale of securities; 21
83	83	or 22
84	84	‘‘(II) introducing an issuer of se-23
85	85	curities and a buyer of such securities 24
86	86	in connection with the placement of 25
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90	90	securities in transactions that are ex-1
91	91	empt from registration requirements 2
92	92	under the Securities Act of 1933; and 3
93	93	‘‘(ii) that is not with respect to— 4
94	94	‘‘(I) a class of publicly traded se-5
95	95	curities; 6
96	96	‘‘(II) the securities of an invest-7
97	97	ment company (as defined in section 3 8
98	98	of the Investment Company Act of 9
99	99	1940); or 10
100	100	‘‘(III) a variable or equity-in-11
101	101	dexed annuity or other variable or eq-12
102	102	uity-indexed life insurance product; 13
103	103	‘‘(B) with respect to a transaction for 14
104	104	which such transaction-based compensation is 15
105	105	received— 16
106	106	‘‘(i) does not handle or take posses-17
107	107	sion of the funds or securities; and 18
108	108	‘‘(ii) does not engage in an activity 19
109	109	that requires registration as an investment 20
110	110	adviser under State or Federal law; and 21
111	111	‘‘(C) is not a finder as defined under sub-22
112	112	section (q). 23
113	113	‘‘(q) F
114	114	INDERSAFEHARBOR.— 24
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118	118	‘‘(1) NONREGISTRATION.—A finder is exempt 1
119	119	from the registration requirements of this Act. 2
120	120	‘‘(2) N
121	121	ATIONAL SECURITIES ASSOCIATIONS .—A 3
122	122	finder shall not be required to become a member of 4
123	123	any national securities association. 5
124	124	‘‘(3) F
125	125	INDER DEFINED.—In this subsection, the 6
126	126	term ‘finder’ means a person described in para-7
127	127	graphs (A) and (B) of subsection (p)(4) that— 8
128	128	‘‘(A) receives transaction-based compensa-9
129	129	tion of equal to or less than $500,000 in any 10
130	130	calendar year; 11
131	131	‘‘(B) receives transaction-based compensa-12
132	132	tion in connection with transactions that result 13
133	133	in a single issuer selling securities valued at 14
134	134	equal to or less than $15 million in any cal-15
135	135	endar year; 16
136	136	‘‘(C) receives transaction-based compensa-17
137	137	tion in connection with transactions that result 18
138	138	in any combination of issuers selling securities 19
139	139	valued at equal to or less than $30 million in 20
140	140	any calendar year; or 21
141	141	‘‘(D) receives transaction-based compensa-22
142	142	tion in connection with fewer than 16 trans-23
143	143	actions that are not part of the same offering 24
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147	147	or are otherwise unrelated in any calendar 1
148	148	year.’’. 2
149	149	(b) V
150	150	ALIDITY OFCONTRACTSWITHREGISTERED 3
151	151	P
152	152	RIVATEPLACEMENTBROKERS ANDFINDERS.—Section 4
153	153	29 of the Securities Exchange Act (15 U.S.C. 78cc) is 5
154	154	amended by adding at the end the following: 6
155	155	‘‘(d) Subsection (b) shall not apply to a contract 7
156	156	made for a transaction if— 8
157	157	‘‘(1) the transaction is one in which the issuer 9
158	158	engaged the services of a broker or dealer that is not 10
159	159	registered under this Act with respect to such trans-11
160	160	action; 12
161	161	‘‘(2) such issuer received a self-certification 13
162	162	from such broker or dealer certifying that such 14
163	163	broker or dealer is a registered private placement 15
164	164	broker under section 15(p) or a finder under section 16
165	165	15(q); and 17
166	166	‘‘(3) the issuer either did not know that such 18
167	167	self-certification was false or did not have a reason-19
168	168	able basis to believe that such self-certification was 20
169	169	false.’’. 21
170	170	(c) R
171	171	EMOVAL OF PRIVATEPLACEMENTBROKERS 22
172	172	F
173	173	ROMDEFINITIONS OFBROKER.— 23
174	174	(1) R
175	175	ECORDS AND REPORTS ON MONETARY IN -24
176	176	STRUMENTS TRANSACTIONS .—Section 5312 of title 25
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180	180	31, United States Code, is amended in subsection 1
181	181	(a)(2)(G) by inserting ‘‘with the exception of a pri-2
182	182	vate placement broker as defined in section 15(p)(4) 3
183	183	of the Securities Exchange Act of 1934 (15 U.S.C. 4
184	184	78o(p)(4))’’ before the semicolon at the end. 5
185	185	(2) S
186	186	ECURITIES EXCHANGE ACT OF 1934 .—Sec-6
187	187	tion 3(a)(4) of the Securities Exchange Act of 1934 7
188	188	(15 U.S.C. 78c(a)(4)) is amended by adding at the 8
189	189	end the following: 9
190	190	‘‘(G) P
191	191	RIVATE PLACEMENT BROKERS .—A 10
192	192	private placement broker as defined in section 11
193	193	15(p)(4) is not a broker for the purposes of this 12
194	194	Act.’’. 13
195	195	SEC. 3. LIMITATIONS ON STATE LAW. 14
196	196	Section 15(i) of the Securities Exchange Act of 1934 15
197	197	(15 U.S.C. 78o(i)) is amended— 16
198	198	(1) by redesignating paragraphs (3) and (4) as 17
199	199	paragraphs (4) and (5), respectively; 18
200	200	(2) by inserting after paragraph (2) the fol-19
201	201	lowing: 20
202	202	‘‘(3) P
203	203	RIVATE PLACEMENT BROKERS AND FIND -21
204	204	ERS.— 22
205	205	‘‘(A) I
206	206	N GENERAL.—No State or political 23
207	207	subdivision thereof may enforce any law, rule, 24
208	208	regulation, or other administrative action that 25
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212	212	imposes greater registration, audit, financial 1
213	213	recordkeeping, or reporting requirements on a 2
214	214	private placement broker or finder than those 3
215	215	that are required under subsections (p) and (q), 4
216	216	respectively. 5
217	217	‘‘(B) D
218	218	EFINITION OF STATE .—For pur-6
219	219	poses of this paragraph, the term ‘State’ in-7
220	220	cludes the District of Columbia and each terri-8
221	221	tory of the United States.’’; and 9
222	222	(3) in paragraph (4), as so redesignated, by 10
223	223	striking ‘‘paragraph (3)’’ and inserting ‘‘paragraph 11
224	224	(5)’’. 12
225	225	Æ
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