Reducing Registration Requirements for Brokers Who Help Businesses With Mergers & Acquisitions (H.R. 477)
Do you support or oppose this bill?
What is H.R. 477?
(Updated November 16, 2018)
This bill would amend the Securities Exchange Act of 1934 to exempt merger and acquisition brokers and their associates from registration requirements. The change would apply to companies whose gross earnings are less than $250 million.
The registration exemption would be denied to brokers who:
Receive, hold, transmit, or have custody of any funds or securities to be exchanged by parties to a transfer of ownership of an eligible privately held company.
On behalf of an issue, engage in a public offering of securities that are subject to mandatory registration, or that require the periodic filing of information, documents, and reports.
Nothing in this bill could be interpreted as limiting the authority of the Securities and Exchange Commission to exempt any person, or any class of persons, from provision of this bill or any related rule or regulation.
Argument in favor
This would help small business owners save money when they sell their business by exempting them from unnecessary registration with the SEC.
Argument opposed
The exemptions that this bill puts in place put small businesses at jeopardy of being taken advantage of by merger and acquisition brokers.
Impact
Small business owners and entrepreneurs who want to sell their business; merger and acquisition brokers; and the Securities and Exchange Commission.
Cost of H.R. 477
The CBO estimates that enacting this bill would cost less than $500,000.
Additional Info
In-Depth: Sponsoring Rep. Bill Huizenga (R-MI) has introduced versions of this bill during the last two sessions of Congress to make it simpler for brokers who facilitate mergers and acquisitions to register with the Securities and Exchange Commission (SEC):
“Trillions of dollars worth of privately owned, main-street mom and pop type businesses will be sold or closed as baby boomers retire. Business brokers play a critical role in facilitating private business mergers, acquisitions, and sales of these main-street companies. By simplifying the regulation and reducing the cost of these business brokerage services, these privately-owned companies would be able to safely, efficiently and effectively sell their company while preserving and protecting jobs at these companies.”
House Democrats expressed their opposition to this bill in its committee report:
“When the committee considered this bill in the 113th Congress, there was broad consensus that its purpose was to encourage the SEC to finalize its no-action relief to exempt certain merger and acquisition brokers from registration. Two weeks after that bill passed in the House, the SEC issued the no-action relief, but added several protections for investors and small businesses. Some have argued that because of the nature of the relief provided by the SEC, the agency could retract its no-action letter at any time. Therefore, they say that bill is necessary to provide legal certainty. However, if that is the goal of this bill, it should more closely track the SEC’s relief, including the additional protections that are omitted from the bill.”
This legislation passed the House Financial Services Committee on a 37-23 vote and has the support of 10 bipartisan cosponsors, including eight Republicans and two Democrats.
Media:
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Sponsoring Rep. Bill Huizenga (R-MI) Press Release (Previous Version)
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House Financial Services Committee Press Release
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CBO Cost Estimate
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Thomson Reuters
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Securities Industry and Financial Markets Association
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Small Business and Entrepreneurship Council (In Favor)
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Midwest Business Brokers and Intermediaries (In Favor)
Summary by Eric Revell
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