HB 6875 — AN ACT CONCERNING THE CONNECTICUT UNIFORM SECURITIES ACT.

188 transfer of ownership of an eligible privately held company;

If the commissioner finds that the broker-dealer or investment adviser cannotPublic provideAct noticeNo. to customers or clients at least ten business days prior to the termination of business activity, the commissioner may exemptthebroker-dealerorinvestmentadviserfromgivingsuchnotice.

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6875 cannot provide notice to customers or clients at least ten business days prior to the termination of business activity, the commissioner may exemptthebroker-dealerorinvestmentadviserfromgivingsuchnotice.

[(g)] (h) Any broker-dealer or investment adviser ceasing to transact business at any branch office or main office in this state as a result of executing an agreement and plan of merger or acquisition shall provide written notice to the commissioner and to each customer or client sHB6875serviced /by Filesuchoffice No.not later thanthedate such merger or acquisition is completed.

188 9 sHB6875 File No.

188 serviced by suchoffice not later thanthedate such merger or acquisition is completed.

[(i)] (j) (1) A broker-dealer or investment adviser may succeed to the current registration ofanother broker-dealer or investment adviser or to aPublic noticeAct filingNo. of an investment adviser registered with the Securities and Exchange Commission, and an investment adviser registered with the Securities and Exchange Commission may succeed to the current registration of an investment adviser or to a notice filing of another investment adviser registered with the Securities and Exchange Commission, by filing as a successor an application for registration pursuant to section 36b-7 or a notice pursuant to subsection (e) of this section for the unexpired portion of the current registration or notice filing and paying the fee required by subsection (a) of section 36b-12.

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6875 a notice filing of an investment adviser registered with the Securities and Exchange Commission, and an investment adviser registered with the Securities and Exchange Commission may succeed to the current registration of an investment adviser or to a notice filing of another investment adviser registered with the Securities and Exchange Commission, by filing as a successor an application for registration pursuant to section 36b-7 or a notice pursuant to subsection (e) of this section for the unexpired portion of the current registration or notice filing and paying the fee required by subsection (a) of section 36b-12.

A predecessor registered under sections 36b-2 to 36b-34, inclusive, shall stop conducting its securities business or investment advisory business other sHB6875than /winding Filedown No.transactions and shall file for withdrawal of its broker-dealer or investment adviser registration not later thanforty-five days after filing its amendment to effect succession.

188 10 sHB6875 File No.

188 than winding down transactions and shall file for withdrawal of its broker-dealer or investment adviser registration not later thanforty-five days after filing its amendment to effect succession.

(5)Public NothingAct inNo. this subsection shall relieve a registrant of its obligation to pay agent and investment adviser agent transfer fees as described in subsection (d) of section 36b-12.

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6875 (5) Nothing in this subsection shall relieve a registrant of its obligation to pay agent and investment adviser agent transfer fees as described in subsection (d) of section 36b-12.

Subsection (a) of section 36b-15 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from sHB6875passage): / File No.

188(a) 11The sHB6875commissioner Filemay, by order, deny, suspend or revoke any registration, censure or impose a bar upon any registrant, any partner, officer or director of any registrant or any other person directly or indirectly controlling any registrant or, by order, restrict or impose conditions on the securities or investment advisory activities that an applicant or registrant may perform in this state if the commissioner finds that (1) the order is in the public interest, and (2) the applicant or Public Act No.

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(a)6875 The commissioner may, by order, deny, suspend or revoke any registration, censure or impose a bar upon any registrant, any partner, officer or director of any registrant or any other person directly or indirectly controlling any registrant or, by order, restrict or impose conditions on the securities or investment advisory activities that an applicant or registrant may perform in this state if the commissioner finds that (1) the order is in the public interest, and (2) the applicant or registrant or, in the case of a broker-dealer or investment adviser, any partner, officer [,] or director, any person occupying a similar status or performing similar functions, or any person directly or indirectly controlling the broker-dealer or investment adviser:

(i) An order issued by the securities administrator of any other state or by the sHB6875Securities /and FileExchange Commission or the Commodity Futures Trading Commission denying, suspending or revoking registration as a broker-dealer, agent, investment adviser, investment adviser agent or a person required to be registered under the Commodity Exchange Act, 7 USC 1 et seq., as from time to time amended, and the rules and regulations thereunder, or the substantial equivalent of those terms, as Public Act No.

18825-85 1213 sHB6875of File17 Substitute House Bill No.

1886875 Securities and Exchange Commission or the Commodity Futures Trading Commission denying, suspending or revoking registration as a broker-dealer, agent, investment adviser, investment adviser agent or a person required to be registered under the Commodity Exchange Act, 7 USC 1 et seq., as from time to time amended, and the rules and regulations thereunder, or the substantial equivalent of those terms, as defined in sections 36b-2 to 36b-34, inclusive, (ii) an order of the Securities and Exchange Commission or Commodity Futures Trading Commission suspending or expelling such applicant, registrant or person from a national securities or commodities exchange or national securities or commodities association registered under the Securities Exchange Act of 1934 or the Commodity Exchange Act, 7 USC 1 et seq., as from time to time amended, or, in the case of an individual, an order of the Securities and Exchange Commission or an equivalent order of the Commodity Futures Trading Commission barring such individual from association with a broker-dealer or an investment adviser, (iii) a suspension, expulsion or other sanction issued by a national securities exchange or other self-regulatory organization registered under federal laws administered by the Securities and Exchange Commission or the Commodity Futures Trading Commission if the effect of the sanction has not been stayed or overturned by appeal or otherwise, (iv) a United States Post Office fraud order, (v) a denial, suspension, revocation or other sanction issued by the commissioner or any other state or federal financial services regulator based upon nonsecurities violations of any state or federal law under which a business involving investments, franchises, business opportunities, insurance, banking or finance is regulated, or (vi) a cease and desist order entered by the Securities and Exchange Commission, a self-regulatory organization or the securities agency or administrator of any other state or Canadian province or territory;

(G) may be denied registration under federal sHB6875law /as Filea broker-dealer, agent, investment adviser, investment adviser agent or as a person required to be registered under the Commodity Exchange Act, 7 USC 1 et seq., as from time to time amended, and the rules and regulations promulgated thereunder, or the substantial Public Act No.

18825-85 1314 sHB6875of File17 Substitute House Bill No.

1886875 law as a broker-dealer, agent, investment adviser, investment adviser agent or as a person required to be registered under the Commodity Exchange Act, 7 USC 1 et seq., as from time to time amended, and the rules and regulations promulgated thereunder, or the substantial equivalent of those terms as defined in sections 36b-2 to 36b-34, inclusive;

(L) in connection with any investigation conducted pursuant to section 36b-26 or any examination under subsection (d) of section 36b-14, has made any material misrepresentation to the commissioner or uponrequest made by the commissioner, has withheld or concealed material information from, or refused to furnish material information to the commissioner, provided, there shall be a rebuttable presumption that any records, including, but not limited to, written, visual, audio, magnetic or electronic records, computer printouts and software, andany other documents,that are withheldor concealed from sHB6875the /commissioner Filein connection with any such investigation or examination are material, unless such presumption is rebutted by Public Act No.

18825-85 1415 sHB6875of File17 Substitute House Bill No.

1886875 the commissioner in connection with any such investigation or examination are material, unless such presumption is rebutted by substantial evidence;

(d) (1) Any person who offers or sells a security that is a covered security under Section 18(b)(3) of the Securities Act of 1933 shall file a consent to service of process with the commissioner as required by subsectionPublic (g)Act of section 36b-33 prior to the first offer or sale of such sHB6875 / File No.

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1886875 subsection (g) of section 36b-33 prior to the first offer or sale of such security in this state.

(2) An issuer proposing to offer and sell in this state securities that are covered securitiesunder Section18(b)(3) oftheSecuritiesAct of 1933 in a Tier 2 offering exempt under Regulation A, 17 CFR 230.251 to 17 CFR 230.263, inclusive, as amended from time to time, shall, at least twenty-one calendar days prior to the initial sale of securities in this state, (A) file with the commissioner (i) a completed Regulation A - Tier 2 notice filing form and, if the commissioner so requests, copies of all documents filed with the Securities and Exchange Commission in connection with such form, and (ii) a consent to service of process to the extent such consent is not included on the notice filing form, and (B) pay to the commissioner a filing fee of two hundred fifty dollars.

ThisGovernor's actAction: shall take effect as follows and shall amend the following sections:

SectionApproved 1June from23, passage2025 36b-6Public Sec.Act No.

225-85 from17 passageof 36b-15(a)17 Sec.

3 from passage 36b-21(d) Statement of Legislative Commissioners:

In Section 1(f)(1)(A), the definition of "business combination related shell company" was rewritten for clarity;

and in Sec.

3(d)(2), a subparagraph designator was inserted after "sale of securities in this state," for clarity, "file with the commissioner the following" was changed to "file with the commissioner" for conciseness, Subparas.

(A) to (C), inclusive, wereredesignatedforclarity,"afiling fee"waschanged sHB6875 / File No.

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188 to "pay to the commissioner a filing fee" for accuracy, "notice filing" and "notice" were changed to "notice filing form" for consistency with other provisions of the Subdiv., "date it is filed" was changed to "date such form is filed" for clarity and consistency with standard drafting conventions and "and a renewal fee" was changed to "and pay to the commissioner a renewal fee" for accuracy.

BA Joint Favorable Subst.

-LCO sHB6875 / File No.

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188 The following Fiscal Impact Statement and Bill Analysis are prepared for the benefit of the members of the General Assembly, solely for purposes of information, summarization and explanation and do not represent the intent of the General Assembly or either chamber thereof for any purpose.

In general, fiscal impacts are based upon a variety of informational sources, including the analyst’s professional knowledge.

Whenever applicable, agency data is consulted as part of the analysis, however final products do not necessarily reflect an assessment from any specific department.

OFA Fiscal Note State Impact:

Agency Affected Fund-Effect FY 26 $ FY 27 $ Banking Dept.

BF - Revenue 7,500 7,500 Gain Banking Dept.

BF - Potential Minimal Minimal Revenue Loss Note:

BF=Banking Fund Municipal Impact:

None Explanation The bill, which requires securities issuers that propose to offer or sell in a Tier 2 offering to pay a $250 filing fee to the Department of Banking (DOB), results in a revenue gain of approximately $7,500 to the Banking Fund in FY 26 and FY 27.

DOB is expected to receive about 30 such notice filing fees each year.

The bill also creates a state broker-dealer registration exemption for merger and acquisition broker-dealers, resulting in a minimal potential revenue loss to the Banking Fund in FY 26 and FY 27, to the extent that the department receives less broker-dealer registration fees.

The Out Years The annualized ongoing fiscal impact identified above would continue into the future subject to the number of Tier 2 securities offerings.

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188 OLR Bill Analysis sHB 6875 AN ACT CONCERNING THE CONNECTICUT UNIFORM SECURITIES ACT.

SUMMARY This bill makes three changes to the state’s securities laws.

First, the bill expands the Department of Banking (DOB) commissioner’senforcementauthorityoverregisteredsecuritiesbroker- dealers, broker-dealer agents, investment advisors, and investment advisor agents by allowing him to censure or impose a bar for the same reasons existing law allows him to deny, suspend, or revoke a registration or restrict or condition securities or investment advisory activities (e.g., certain statutory noncompliance or criminal convictions, subject to certain federal orders, insolvency, or supervision failure).

The commissioner’s expanded authority also covers the registrants’ partners, officers, or directors, or any person who directly or indirectly controls them.

By law, these enforcement actions are subject to prior notice, an opportunity for a hearing, and written findings of fact and conclusions of law.

The bill requires securities issuers that propose to offer or sell in a Tier 2 offering, within 21 days before the initial sale of securities in Connecticut, to file a notice of filing and certain related documents with DOB and pay a $250 filing fee.

Lastly, thebillcreatesa state broker-dealer registrationexemptionfor merger and acquisition (M & A) broker-dealers, which parallels a federal exemption under the Securities Exchange Act.

EFFECTIVE DATE:

Upon passage sHB6875 / File No.

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188 M & A BROKER-DEALER EXEMPTION The bill codifies in Connecticut law a federal registration exemption for M & A broker-dealers (see 15 U.S.C.

§ 78o).

These broker-dealers work for sellers or buyers in securities transactions only as part of an ownership transfer of an eligible privately held company (generally a companythatmeetsspecifiedregistration,filing,andsizerequirements) under certain conditions.

For example, the broker-dealer must reasonably believe that the person acquiring the assets will control the company or its business (such as having the right to vote or direct the sale of 25% of its voting shares) and be active in its management.

Currently, they must be registered in Connecticut as regular broker- dealers.

Under the bill, the exemption does not apply to an M & A broker- dealer that does the following:

1.

receives, holds, transmits, or has custody of the funds or securities to be exchanged by the parties to the transaction;

2.

on an issuer’s behalf, engages in a public offering of any class of securities that is registered, or should be, with the Securities and Exchange Commission (SEC) or files, or is required to file, certain periodic information, documents, and reports;

3.

engages on behalf of any party in a transaction involving a shell company (i.e.

one with no or nominal operations and no or nominal assets, only cash or cash equivalent assets, or a combination of cash or cash equivalents and nominal other assets) but not a business combination related shell company (i.e.

a shell company only used to change the nonshell company’s domicile in the United States or to complete certain business combinations);

4.

provides financing related to an eligible privately held company’s ownership transfer;

5.

helps any party get financing from an unaffiliated third party sHB6875 / File No.

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188 without complying with associated laws and disclosing compensation in writing to the party;

6.

represents both the buyer and seller in the same transaction without giving clear, written disclosure as to the parties the broker-dealer represents and having written consent from both parties;

7.

facilitates a transaction with a group of buyers that the broker- dealer helped form to acquire the eligible privately held company;

8.

engages in a transaction that involves the transfer of ownership of an eligible privately held company to a passive buyer or group of them;

9.

binds a party to an eligible privately held company’s ownership transfer;

or 10.

was subject to certain court or regulatory actions such as a securities- or finance-related criminal conviction or court injunction, a DOB or SEC cease and desist order, a registration revocation, or certain other sanctions (which also applies to the actions of the broker-dealer’s officers, directors, members, managers, partners, control persons, or employees).

TIER 2 NOTICE FILING FORM AND FEE The bill requires securities issuers that propose to offer or sell in a Tier 2 offering, within 21 days before the initial sale of securities in Connecticut, to file thefollowing with the DOB and pay a$250 filing fee:

1.

completed Regulation A – Tier 2 notice filing form and copies of all documents filed with the SEC related to the form if the DOB commissioner requests the copies and 2.

consent to service of process if the consent is not on the notice filing form.

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188 Under the bill, the initial notice filing is effective for 12 months after its filing with the DOB.

For each additional 12-month period that continues the same offering, the issuer may renew its notice by filing a renewal notice filing form and paying a $250 renewal fee by the notice filing expiration date.

Federal securities laws require security offerings or sales to be registered with the SEC or meet an exception.

Regulation A is an exception that applies to public offerings, which includes two tiers.

A “Tier 2” offering is one of up to $75 million in a 12-month period.

COMMITTEE ACTION Banking Committee Joint Favorable Yea 12 Nay 0 (03/06/2025) sHB6875 / File No.

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