NASAA Supports Regulatory Relief For M&A Brokers


Last June, Congressman Bill Huizenga introduced H.R. 2274 which would amend the Securities Exchange Act of 1934 to provide for a notice-filing registration procedure for brokers performing services in connection with the transfer of ownership of smaller privately held companies.  In most cases, registration would be effective upon filing.  Given NASAA’s generally jaundiced view of recent securities legislation, including many provisions of the JOBS Act, I was surprised to see that the states are generally supportive of H.R. 2274.  In testimony last week before the House Committee on Financial Services Subcommittee on Capital Markets and Government Sponsored Enterprises, A. Heath Abshure said:

State securities administrators generally support the targeted, well-balanced provisions of H.R. 2274, the Small Business Mergers,  Acquisitions, Sales, and Brokerage Simplification Act of 2013, H.R. 2274.  . . .  NASAA is optimistic  that this legislation will encourage registration and regulatory compliance by  M&A brokers.

Commissioner Abshure is NASAA’s immediate past President.  NASAA’s support wasn’t unequivocal, it does have a technical objection to the preemptive language included in the bill.

As surprising as it may seem, California exempts from broker-dealer registration “any person who effects transactions in securities in this state only in connection with mergers, consolidations or purchases of corporate assets, and who does not receive, transmit, or hold for customers any funds or securities in connection with such transactions.”  10 CCR § 260.204.5.  Of course, this is not an exemption from registration under the Exchange Act.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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