[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2590 Introduced in House (IH)]
<DOC>
118th CONGRESS
1st Session
H. R. 2590
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
April 13, 2023
Mr. Garbarino 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 Representatives 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 2023''.
SEC. 2. SAFE HARBORS FOR PRIVATE PLACEMENT BROKERS AND FINDERS.
(a) In General.--Section 15 of the Securities Exchange Act of 1934
(15 U.S.C. 78o) is amended by adding at the end the following:
``(p) Private Placement Broker Safe Harbor.--
``(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 enactment of this subsection the
Commission shall promulgate regulations that require the rules
of any national securities association to allow a private
placement broker to become a member of such national securities
association subject to reduced membership requirements
consistent with this subsection.
``(3) Disclosures required.--Before effecting 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 anticipated
payment for services rendered as a private placement
broker in connection with such transaction;
``(C) the person to whom any such payment is made;
and
``(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 associated person.
``(4) Private placement broker defined.--In this
subsection, the term `private placement broker' means a person
that--
``(A) receives transaction-based compensation--
``(i) for effecting a transaction by--
``(I) introducing an issuer of
securities and a buyer of such
securities in connection with the sale
of a business effected as the sale of
securities; or
``(II) introducing an issuer of
securities and a buyer of such
securities in connection with the
placement of securities in transactions
that are exempt from registration
requirements under the Securities Act
of 1933; and
``(ii) that is not with respect to--
``(I) a class of publicly traded
securities;
``(II) the securities of an
investment company (as defined in
section 3 of the Investment Company Act
of 1940); or
``(III) a variable or equity-
indexed annuity or other variable or
equity-indexed life insurance product;
``(B) with respect to a transaction for which such
transaction-based compensation is received--
``(i) does not handle or take possession 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 subsection
(q).
``(q) Finder Safe Harbor.--
``(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 paragraphs (A) and (B) of
subsection (p)(4) that--
``(A) receives transaction-based compensation of
equal to or less than $500,000 in any calendar year;
``(B) receives transaction-based compensation in
connection with transactions that result in a single
issuer selling securities valued at equal to or less
than $15 million in any calendar year;
``(C) receives transaction-based compensation 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 compensation in
connection with fewer than 16 transactions that are not
part of the same offering 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 transaction;
``(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 reasonable 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 instruments
transactions.--Section 5312 of title 31, United States Code, is
amended in subsection (a)(2)(G) by inserting ``with the
exception of a private 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.--Section 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 paragraphs (3) and (4) as paragraphs
(4) and (5), respectively;
(2) by inserting after paragraph (2) the following:
``(3) Private placement brokers and finders.--
``(A) In general.--No State or political
subdivision thereof may enforce any law, rule,
regulation, or other administrative action that 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 purposes of this
paragraph, the term `State' includes the District of
Columbia and each territory of the United States.'';
and
(3) in paragraph (4), as so redesignated, by striking
``paragraph (3)'' and inserting ``paragraph (5)''.
<all>