1. (a) Definitions. For purposes of this Section:

   1. (1) "Business combination related shell company" means a shell company that is formed by an entity that is not a shell company: (2) "Control" means the power, directly or indirectly, to direct the management or policies of a company, whether through ownership of securities, by contract, or otherwise. There is a presumption of control if, upon completion of a transaction, the buyer or group of buyers:
2. (A) solely for the purpose of changing the corporate domicile of that entity solely within the United States; or

3. (B) solely for the purpose of completing a business combination transaction as defined under Rule 165(f) of the 1933 Act [17 C.F.R. §230.165(f)] among one or more entities other than the company itself, none of which is a shell company.

   1. (A) has the right to vote 25 percent or more of a class of voting securities or the power to sell or direct the sale of 25 percent or more of a class of voting securities; or
   2. (B) in the case of a partnership or limited liability company, has the right to receive upon dissolution, or has contributed, 25 percent or more of the capital.

   3. (3) "Eligible privately held company" means a privately held company that meets both of the following conditions:

      1. (A) the company does not have any class of securities registered, or required to be registered with the SEC under Section 12 of the 1934 Act, [15 U.S.C. §78l] or with respect to which the company files, or is required to file, periodic information, documents, and reports under subsection 15(d) of the 1934 Act, [15 U.S.C. §78o(d)]; and

      2. (B) in the fiscal year ending immediately before the fiscal year in which the services of the Merger and Acquisition Broker are initially engaged with respect to the securities transaction, the company meets either or both of the following conditions (determined in accordance with the historical financial accounting records of the company):

         1. (i) The earnings of the company before interest, taxes, depreciation, and amortization are less than $25,000,000.
         2. (ii) The gross revenues of the company are less than $250,000,000.

   4. (4) "Merger and Acquisition Broker" means any broker-dealer and any person associated with a broker-dealer engaged in the business of effecting securities transactions solely in connection with the transfer of ownership of an eligible privately held company, regardless of whether that broker-dealer acts on behalf of a seller or buyer, through the purchase, sale, exchange, issuance, repurchase, or redemption of, or a business combination involving, securities, or assets of the eligible privately held company if the broker-dealer reasonably believes that:

      1. (A) upon consummation of the transaction, any person acquiring securities or assets of the eligible privately held company, acting alone or in concert,
      2. (i) will control and, directly or indirectly, will be active in the management of the eligible privately held company or the business conducted with the assets of the eligible privately held company; and
      3. (B) if any person is offered securities in exchange for securities or assets of the eligible privately held company, such person will, prior to becoming legally bound to consummate the transaction, receive or have reasonable access to the most recent fiscal year-end financial statements of the issuer of the securities as customarily prepared by its management in the normal course of operations, and, if the financial statements of the issuer are audited, reviewed, or compiled, any related statement by the independent accountant; a balance sheet dated not more than 120 days before the date of the exchange offer; and information pertaining to the management, business, results of operation for the period covered by the foregoing financial statements, and any material loss contingencies of the issuer.
4. (ii) directly or indirectly, will be active in the management of the eligible privately held company or the business conducted with the assets of the eligible privately held company; and with the assets of the eligible privately held company, including without limitation, for example, by:
5. (I) electing executive officers;
6. (II) approving the annual budget;
7. (III) serving as an executive or other executive manager; or

8. (IV) carrying out such other activities as the Administrator may, by rule, determine to be in the public interest; and

   1. (5) "Shell company" means a company that at the time of a transaction with an eligible privately held company:

      1. (A) has no or nominal operations; and

      2. (B) has:

         1. (i) no or nominal assets:
         2. (ii) assets consisting solely of cash and cash equivalents; or
         3. (iii) assets consisting of any amount of cash and cash equivalents and nominal other assets.
9. (b) Exemption. Except as provided in (c) and (d) of this Section, a Merger and Acquisition Broker shall be exempt from registration as a broker-dealer under Section 1-401 of the Securities Act.

10. (c) Excluded activities. A Merger and Acquisition Broker is not exempt from registration under (b) of this Section if such broker does any of the following:

    1. (1) Directly or indirectly, in connection with the transfer of ownership of an eligible privately held company, receives, holds, transmits, or has custody of the funds or securities to be exchanged by the parties to the transaction.
    2. (2) Engages on behalf of an issuer in a public offering of any class of securities that is registered, or required to be registered, with the SEC under Section 12 of the 1934 Act [15 U.S.C. §78l] or with respect to which the issuer files, or is required to file, periodic information, documents, and reports under subsection 15(d) of the 1934 Act[15 U.S.C. §78o(d)].
    3. (3) Engages on behalf of any party in a transaction involving a shell company other than a business combination related shell company.
    4. (4) Directly, or indirectly through any of its affiliates, provides financing related to the transfer of ownership of an eligible privately held company.
    5. (5) Assists any party to obtain financing from an unaffilliated third party without:
11. (A) complying with all other applicable laws in connection with such assistance, including, if applicable, Regulation T of the Federal Reserve Board [12 C.F.R. §220.1 through §220.132]; and
12. (B) disclosing any compensation in writing to the party.
13. (6) Represents both the buyer and the seller in the same transaction without providing clear written disclosure as to the parties the broker represents and obtaining written consent from both parties to the joint representation.
14. (7) Facilitates a transaction with a group of buyers formed with the assistance of the Merger and Acquisition Broker to acquire the eligible privately held company.
15. (8) Engages in a transaction involving the transfer of ownership of an eligible privately held company to a passive buyer or group of passive buyers.
16. (9) Binds a party to a transfer of ownership of an eligible privately held company.
17. (d) Disqualifications. A merger and acquisition broker is not exempt from registration under (b) of this Section if such broker (and if and as applicable, including any officer, director, member, manager, partner, or employee of such broker):
18. (1) has been barred from association with a broker or dealer by the Administrator, any State, or any self-regulatory organization; or
19. (2) is suspended from association with a broker or dealer.
20. (e) Rules of construction. Nothing in this paragraph shall be construed to limit any other authority of the Administrator to exempt any person, or any class of persons, from any provision of the Securities Act, or from any provision of any rule or regulation thereunder.
21. (f) Inflation adjustment.
22. (1) In General. On the date that is five years after the date of the enactment of this Section, and every five years thereafter, each dollar amount in subparagraph (a)(3)(B) shall be adjusted by:
23. (A) dividing the annual value of the Employment Cost Index for Wages and Salaries, Private Industry Workers (or any successor index), as published by the Bureau of Labor Statistics, for the calendar year preceding the calendar year in which the adjustment is being made by the annual value of such index (or successor) for the calendar year ending December 31, 2020; and
24. (B) multiplying such dollar amount by the quotient obtained under (A).
25. (2) Rounding. Each dollar amount determined under (1) of this subsection shall be rounded to the nearest multiple of $100,000.

Added at 37 Ok Reg 2194, eff 11-1-20

Amended at 38 Ok Reg 2503, eff 11-1-21

Amended at 41 Ok Reg, Number 22, effective 8-15-24

Amended at 42 Ok Reg, Number 20, effective 8-15-25