NASAA Adopts Model M&A State Rule

The North American Securities Administrators Association (“NASAA”) formally adopted a Model State Rule which, if adopted by each state, will exempt M&A Brokers from having to register as securities brokers at the state level.

The intent of NASAA’s model rule is to harmonize state securities rules and regulations with recent changes in federal securities regulation which resulted from the No Action Letter issued by the Securities and Exchange Commission last year that addressed M&A Broker activities.

The language in NASAA’s model rule closely parallels the language in pending legislation in the Senate  (S 1010, the Mergers, Acquisitions, Sales and Brokerage Simplification Act of 2015) , including retaining the size caps of greater than $250 million in gross revenue and/or less than $25 million in EBITDA; the 20% threshold for the presumption of control and or significant influence.  

In any event, the ultimate passage of the model rule by states will result in smaller M&A Brokers obtaining further relief from the registration requirements that the No Action Letter provided on a federal level.