[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2590 Introduced in House (IH)]

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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)''.
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