| 1 | 1 | | II |
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| 2 | 2 | | 118THCONGRESS |
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| 3 | 3 | | 2 |
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| 4 | 4 | | DSESSION S. 4493 |
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| 5 | 5 | | To amend the Securities Exchange Act of 1934 to create a safe harbor |
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| 6 | 6 | | for finders and private placement brokers, and for other purposes. |
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| 7 | 7 | | IN THE SENATE OF THE UNITED STATES |
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| 8 | 8 | | JUNE11, 2024 |
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| 9 | 9 | | Mr. C |
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| 10 | 10 | | RAMERintroduced the following bill; which was read twice and referred |
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| 11 | 11 | | to the Committee on Banking, Housing, and Urban Affairs |
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| 12 | 12 | | A BILL |
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| 13 | 13 | | To amend the Securities Exchange Act of 1934 to create |
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| 14 | 14 | | a safe harbor for finders and private placement brokers, |
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| 15 | 15 | | and for other purposes. |
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| 16 | 16 | | Be it enacted by the Senate and House of Representa-1 |
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| 17 | 17 | | tives of the United States of America in Congress assembled, 2 |
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| 18 | 18 | | SECTION 1. SHORT TITLE. 3 |
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| 19 | 19 | | This Act may be cited as the ‘‘Unlocking Capital for 4 |
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| 20 | 20 | | Small Businesses Act of 2024’’. 5 |
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| 21 | 21 | | SEC. 2. SAFE HARBORS FOR PRIVATE PLACEMENT BRO-6 |
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| 22 | 22 | | KERS AND FINDERS. 7 |
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| 23 | 23 | | (a) I |
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| 24 | 24 | | NGENERAL.—Section 15 of the Securities Ex-8 |
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| 25 | 25 | | change Act of 1934 (15 U.S.C. 78o) is amended by adding 9 |
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| 26 | 26 | | at the end the following: 10 |
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| 28 | 28 | | kjohnson on DSK7ZCZBW3PROD with $$_JOB 2 |
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| 29 | 29 | | •S 4493 IS |
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| 30 | 30 | | ‘‘(p) PRIVATEPLACEMENTBROKERSAFEHAR-1 |
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| 31 | 31 | | BOR.— 2 |
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| 32 | 32 | | ‘‘(1) R |
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| 33 | 33 | | EGISTRATION REQUIREMENTS .—Not 3 |
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| 34 | 34 | | later than 270 days after the date of the enactment 4 |
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| 35 | 35 | | of this subsection the Commission shall promulgate 5 |
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| 36 | 36 | | regulations with respect to private placement brokers 6 |
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| 37 | 37 | | that are no more stringent than those imposed on 7 |
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| 38 | 38 | | funding portals. Not later than 270 days after the 8 |
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| 39 | 39 | | publication of the proposed regulations in the Fed-9 |
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| 40 | 40 | | eral Register, the Commission shall promulgate final 10 |
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| 41 | 41 | | rules. 11 |
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| 42 | 42 | | ‘‘(2) N |
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| 43 | 43 | | ATIONAL SECURITIES ASSOCIATIONS .— 12 |
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| 44 | 44 | | Not later than 270 days after the date of the enact-13 |
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| 45 | 45 | | ment of this subsection the Commission shall pro-14 |
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| 46 | 46 | | mulgate regulations that require the rules of any na-15 |
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| 47 | 47 | | tional securities association to allow a private place-16 |
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| 48 | 48 | | ment broker to become a member of such national 17 |
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| 49 | 49 | | securities association subject to reduced membership 18 |
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| 50 | 50 | | requirements consistent with this subsection. Not 19 |
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| 51 | 51 | | later than 270 days after the publication of the pro-20 |
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| 52 | 52 | | posed regulations in the Federal Register, the Com-21 |
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| 53 | 53 | | mission shall promulgate final rules. 22 |
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| 54 | 54 | | ‘‘(3) D |
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| 55 | 55 | | ISCLOSURES REQUIRED .—Before the 23 |
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| 56 | 56 | | consummation of a transaction effecting a private 24 |
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| 57 | 57 | | placement, a private placement broker shall disclose 25 |
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| 59 | 59 | | kjohnson on DSK7ZCZBW3PROD with $$_JOB 3 |
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| 60 | 60 | | •S 4493 IS |
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| 61 | 61 | | clearly and conspicuously, in writing, to all parties 1 |
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| 62 | 62 | | to the transaction as a result of the broker’s activi-2 |
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| 63 | 63 | | ties— 3 |
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| 64 | 64 | | ‘‘(A) that the broker is acting as a private 4 |
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| 65 | 65 | | placement broker; 5 |
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| 66 | 66 | | ‘‘(B) the amount of any compensation or 6 |
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| 67 | 67 | | anticipated compensation for services rendered 7 |
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| 68 | 68 | | as a private placement broker in connection 8 |
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| 69 | 69 | | with such transaction; 9 |
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| 70 | 70 | | ‘‘(C) the person to whom any such com-10 |
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| 71 | 71 | | pensation is made; and 11 |
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| 72 | 72 | | ‘‘(D) any beneficial interest in the issuer, 12 |
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| 73 | 73 | | direct or indirect, of the private placement 13 |
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| 74 | 74 | | broker, of a member of the immediate family of 14 |
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| 75 | 75 | | the private placement broker, of an associated 15 |
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| 76 | 76 | | person of the private placement broker, or of a 16 |
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| 77 | 77 | | member of the immediate family of such associ-17 |
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| 78 | 78 | | ated person. 18 |
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| 79 | 79 | | ‘‘(4) P |
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| 80 | 80 | | RIVATE PLACEMENT BROKER DE -19 |
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| 81 | 81 | | FINED.—In this subsection, the term ‘private place-20 |
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| 82 | 82 | | ment broker’ means a person that— 21 |
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| 83 | 83 | | ‘‘(A) receives transaction-based compensa-22 |
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| 84 | 84 | | tion— 23 |
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| 85 | 85 | | ‘‘(i) for effecting a transaction by— 24 |
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| 87 | 87 | | kjohnson on DSK7ZCZBW3PROD with $$_JOB 4 |
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| 88 | 88 | | •S 4493 IS |
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| 89 | 89 | | ‘‘(I) introducing an issuer of se-1 |
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| 90 | 90 | | curities and a buyer of such securities 2 |
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| 91 | 91 | | in connection with the sale of a busi-3 |
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| 92 | 92 | | ness effected as the sale of securities; 4 |
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| 93 | 93 | | or 5 |
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| 94 | 94 | | ‘‘(II) introducing an issuer of se-6 |
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| 95 | 95 | | curities and a buyer of such securities 7 |
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| 96 | 96 | | in connection with the placement of 8 |
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| 97 | 97 | | securities in transactions that are ex-9 |
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| 98 | 98 | | empt from registration requirements 10 |
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| 99 | 99 | | under the Securities Act of 1933; and 11 |
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| 100 | 100 | | ‘‘(ii) that is not with respect to— 12 |
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| 101 | 101 | | ‘‘(I) a class of publicly traded se-13 |
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| 102 | 102 | | curities; 14 |
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| 103 | 103 | | ‘‘(II) the securities of an invest-15 |
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| 104 | 104 | | ment company (as defined in section 3 16 |
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| 105 | 105 | | of the Investment Company Act of 17 |
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| 106 | 106 | | 1940); or 18 |
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| 107 | 107 | | ‘‘(III) a variable or equity-in-19 |
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| 108 | 108 | | dexed annuity or other variable or eq-20 |
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| 109 | 109 | | uity-indexed life insurance product; 21 |
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| 110 | 110 | | ‘‘(B) with respect to a transaction for 22 |
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| 111 | 111 | | which such transaction-based compensation is 23 |
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| 112 | 112 | | received— 24 |
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| 114 | 114 | | kjohnson on DSK7ZCZBW3PROD with $$_JOB 5 |
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| 115 | 115 | | •S 4493 IS |
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| 116 | 116 | | ‘‘(i) does not handle or take posses-1 |
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| 117 | 117 | | sion of the funds or securities; and 2 |
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| 118 | 118 | | ‘‘(ii) does not engage in an activity 3 |
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| 119 | 119 | | that requires registration as an investment 4 |
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| 120 | 120 | | adviser under State or Federal law; and 5 |
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| 121 | 121 | | ‘‘(C) is not a finder as defined under sub-6 |
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| 122 | 122 | | section (q). 7 |
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| 123 | 123 | | ‘‘(q) F |
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| 124 | 124 | | INDERSAFEHARBOR.— 8 |
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| 125 | 125 | | ‘‘(1) N |
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| 126 | 126 | | ONREGISTRATION.—A finder is exempt 9 |
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| 127 | 127 | | from the registration requirements of this Act. 10 |
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| 128 | 128 | | ‘‘(2) N |
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| 129 | 129 | | ATIONAL SECURITIES ASSOCIATIONS .—A 11 |
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| 130 | 130 | | finder shall not be required to become a member of 12 |
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| 131 | 131 | | any national securities association. 13 |
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| 132 | 132 | | ‘‘(3) F |
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| 133 | 133 | | INDER DEFINED.—In this subsection, the 14 |
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| 134 | 134 | | term ‘finder’ means a person described in para-15 |
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| 135 | 135 | | graphs (A) and (B) of subsection (p)(4) that— 16 |
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| 136 | 136 | | ‘‘(A) receives transaction-based compensa-17 |
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| 137 | 137 | | tion of equal to or less than $500,000 in any 18 |
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| 138 | 138 | | calendar year; 19 |
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| 139 | 139 | | ‘‘(B) receives transaction-based compensa-20 |
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| 140 | 140 | | tion in connection with transactions that result 21 |
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| 141 | 141 | | in a single issuer selling securities valued at 22 |
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| 142 | 142 | | equal to or less than $15,000,000 in any cal-23 |
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| 143 | 143 | | endar year; 24 |
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| 144 | 144 | | VerDate Sep 11 2014 04:09 Jul 31, 2024 Jkt 049200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S4493.IS S4493 |
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| 145 | 145 | | kjohnson on DSK7ZCZBW3PROD with $$_JOB 6 |
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| 146 | 146 | | •S 4493 IS |
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| 147 | 147 | | ‘‘(C) receives transaction-based compensa-1 |
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| 148 | 148 | | tion in connection with transactions that result 2 |
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| 149 | 149 | | in any combination of issuers selling securities 3 |
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| 150 | 150 | | valued at equal to or less than $30,000,000 in 4 |
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| 151 | 151 | | any calendar year; or 5 |
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| 152 | 152 | | ‘‘(D) receives transaction-based compensa-6 |
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| 153 | 153 | | tion in connection with fewer than 16 trans-7 |
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| 154 | 154 | | actions that are not part of the same offering 8 |
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| 155 | 155 | | or are otherwise unrelated in any calendar year. 9 |
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| 156 | 156 | | ‘‘(4) A |
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| 157 | 157 | | DJUSTMENT FOR INFLATION .—The 10 |
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| 158 | 158 | | amounts described in paragraph (3) shall be in-11 |
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| 159 | 159 | | creased each year by an amount equal to the per-12 |
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| 160 | 160 | | centage increase, if any, in the Consumer Price 13 |
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| 161 | 161 | | Index, as determined by the Department of Labor or 14 |
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| 162 | 162 | | its successor.’’. 15 |
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| 163 | 163 | | (b) V |
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| 164 | 164 | | ALIDITY OFCONTRACTSWITHREGISTERED 16 |
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| 165 | 165 | | P |
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| 166 | 166 | | RIVATEPLACEMENTBROKERS ANDFINDERS.—Section 17 |
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| 167 | 167 | | 29 of the Securities Exchange Act (15 U.S.C. 78cc) is 18 |
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| 168 | 168 | | amended by adding at the end the following: 19 |
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| 169 | 169 | | ‘‘(d) Subsection (b) shall not apply to a contract 20 |
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| 170 | 170 | | made for a transaction if— 21 |
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| 171 | 171 | | ‘‘(1) the transaction is one in which the issuer 22 |
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| 172 | 172 | | engaged the services of a broker or dealer that is not 23 |
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| 173 | 173 | | registered under this Act with respect to such trans-24 |
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| 174 | 174 | | action; 25 |
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| 176 | 176 | | kjohnson on DSK7ZCZBW3PROD with $$_JOB 7 |
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| 177 | 177 | | •S 4493 IS |
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| 178 | 178 | | ‘‘(2) such issuer received a self-certification 1 |
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| 179 | 179 | | from such broker or dealer certifying that such 2 |
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| 180 | 180 | | broker or dealer is a registered private placement 3 |
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| 181 | 181 | | broker under section 15(p) or a finder under section 4 |
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| 182 | 182 | | 15(q); and 5 |
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| 183 | 183 | | ‘‘(3) the issuer either did not know that such 6 |
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| 184 | 184 | | self-certification was false or did not have a reason-7 |
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| 185 | 185 | | able basis to believe that such self-certification was 8 |
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| 186 | 186 | | false.’’. 9 |
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| 187 | 187 | | (c) R |
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| 188 | 188 | | EMOVAL OF PRIVATEPLACEMENTBROKERS 10 |
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| 189 | 189 | | F |
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| 190 | 190 | | ROMDEFINITIONS OFBROKER.— 11 |
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| 191 | 191 | | (1) R |
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| 192 | 192 | | ECORDS AND REPORTS ON MONETARY IN -12 |
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| 193 | 193 | | STRUMENTS TRANSACTIONS .—Section 5312 of title 13 |
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| 194 | 194 | | 31, United States Code, is amended in subsection 14 |
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| 195 | 195 | | (a)(2)(G) by inserting ‘‘with the exception of a pri-15 |
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| 196 | 196 | | vate placement broker as defined in section 15(p)(4) 16 |
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| 197 | 197 | | of the Securities Exchange Act of 1934 (15 U.S.C. 17 |
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| 198 | 198 | | 78o(p)(4))’’ before the semicolon at the end. 18 |
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| 199 | 199 | | (2) S |
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| 200 | 200 | | ECURITIES EXCHANGE ACT OF 1934 .—Sec-19 |
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| 201 | 201 | | tion 3(a)(4) of the Securities Exchange Act of 1934 20 |
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| 202 | 202 | | (15 U.S.C. 78c(a)(4)) is amended by adding at the 21 |
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| 203 | 203 | | end the following: 22 |
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| 204 | 204 | | ‘‘(G) P |
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| 205 | 205 | | RIVATE PLACEMENT BROKERS .—A 23 |
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| 206 | 206 | | private placement broker as defined in section 24 |
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| 208 | 208 | | kjohnson on DSK7ZCZBW3PROD with $$_JOB 8 |
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| 209 | 209 | | •S 4493 IS |
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| 210 | 210 | | 15(p)(4) is not a broker for the purposes of this 1 |
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| 211 | 211 | | Act.’’. 2 |
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| 212 | 212 | | SEC. 3. LIMITATIONS ON STATE LAW. 3 |
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| 213 | 213 | | Section 15(i) of the Securities Exchange Act of 1934 4 |
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| 214 | 214 | | (15 U.S.C. 78o(i)) is amended— 5 |
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| 215 | 215 | | (1) by redesignating paragraph (3) as para-6 |
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| 216 | 216 | | graph (4); and 7 |
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| 217 | 217 | | (2) by inserting after paragraph (2) the fol-8 |
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| 218 | 218 | | lowing: 9 |
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| 219 | 219 | | ‘‘(3) P |
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| 220 | 220 | | RIVATE PLACEMENT BROKERS AND FIND -10 |
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| 221 | 221 | | ERS.— 11 |
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| 222 | 222 | | ‘‘(A) I |
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| 223 | 223 | | N GENERAL.—No State or political 12 |
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| 224 | 224 | | subdivision thereof may enforce any law, rule, 13 |
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| 225 | 225 | | regulation, or other administrative action that 14 |
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| 226 | 226 | | imposes greater registration, audit, financial 15 |
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| 227 | 227 | | recordkeeping, or reporting requirements on a 16 |
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| 228 | 228 | | private placement broker or finder than those 17 |
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| 229 | 229 | | that are required under subsections (p) and (q), 18 |
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| 230 | 230 | | respectively. 19 |
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| 231 | 231 | | ‘‘(B) D |
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| 232 | 232 | | EFINITION OF STATE .—For pur-20 |
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| 233 | 233 | | poses of this paragraph, the term ‘State’ in-21 |
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| 234 | 234 | | cludes the District of Columbia and each terri-22 |
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| 235 | 235 | | tory of the United States.’’. 23 |
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| 236 | 236 | | Æ |
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| 238 | 238 | | kjohnson on DSK7ZCZBW3PROD with $$_JOB |
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