Hearing Financial Services Committee ("HFSC") H.R. 609

WASHINGTON D.C.  – September 11, 2019 – BIEF Chairperson John Zayac comments on today’s meeting.  Based on my observations from today’s HFSC hearing on various bills, including our own HR 609, I believe the following points are worth noting:

• The overwhelming majority of the testimony and Q&A did NOT concern HR 609, but rather focused on appropriate strategies and safeguards for small, private investors to invest in private capital market opportunities.
• NASAA’s printed testimony DID have a strong, favorable mention in support of HR 609 (reprinted immediately below); but due to time constraints NASAA’s oral testimony made no mention of HR 609.
• Written testimony from Attorney Douglas Ellenoff, founding partner with the prominent New York securities law firm of Ellenoff, Grossman & Schole, does NOT include any mention of HR 609, but he did come out in strong support of HR 609 in his oral testimony, and in responding to questions from Congressman Huizenga.
• Strong support for HR 609 DID come from NASAA’s immediate past president, Mike Pieciak, and Attorney Douglas Ellenoff, in their responses to questions directed to them by Congressman Bill Huizenga, the bill’s original sponsor.
• HFSC Markup is later this month, then onto the floor of the House for final passage by the full House, then on to the Senate.

Excerpt from NASAA’s written testimony before the HFSC Hearing on 9/11/19.

4. The Small Business Mergers, Acquisitions, Sales, and Brokerage Simplification Act (H.R. 609)

The Small Business Mergers, Acquisitions, Sales, and Brokerage Simplification Act would establish an exemption from registration requirements under federal securities laws for persons serving as brokers in certain merger and acquisition deals (“M&A brokers”). The exemption envisioned by the legislation is broadly consistent with a Model Exemption that NASAA approved in 2016, and with the de-facto federal policy that has existed since the issuance of a “no-action” letter by the Staff of the Commission on Feb. 4, 2014.44

State securities regulators share Congress’s interest in establishing a more streamlined regulatory framework for persons serving as M&A brokers in deals that involve the transfer of securities, subject to certain conditions.45 Moreover, we believe H.R. 609 appropriately balances the legitimate interests of all stakeholders, while maintaining significant safeguards for investors and small business owners.46

Further, while the framework established by H.R. 609 has been largely in place since 2014, federal legislation remains necessary due the limited legal effect of SEC staff “no-action” letters.
NASAA supports H.R. 609, and we look forward to working with Ranking Member Huizenga and other members of the Subcommittee to facilitate its consideration and passage.

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Todd Cushing

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