On November 14, 2013, the Financial Services Committee of the U.S. House of Representatives voted unanimously to report HR 2274, as amended, to the full House with a favorable recommendation. HR 2274 is known as the Small Business Mergers, Acquisitions, Sales, and Brokerage Simplification Act of 2013, and its intention is to amend the Securities Exchange Act of 1934 (“Securities Act”) to provide for a notice-filing registration procedure for business brokers performing services in connection with the transfer of ownership of small privately held companies and to provide for regulation appropriate to the limited scope of their activities.
Under existing regulations, the same broker-dealer registration requirements apply to business brokers who assist with the sale of a small business to a purchaser who will be active in managing the business after sale and a securities brokers who engage in the offer and sale of securities of a publicly-traded companies to passive investors. Existing regulations fail to distinguish between these two activities despite the obvious need for differential treatment.
