Mergers and Acquisitions

The SEC’s Division of Trading and Markets stated that it would not recommend enforcement action if a “mergers and acquisitions broker” were to engage in the sale or purchase of a privately held company without registering as a broker-dealer under Securities Exchange Act of 1934 Section 15(b). Lee M&A Brokers, SEC, No-Action Letter, avail,

Recently, the SEC’s Division of Trading and Markets Staff issued no action relief allowing those persons and entities specializing in mergers and acquistions (“M&A Broker”) to avoid broker-dealer registration.  See http://www.sec.gov/divisions/marketreg/mr-noaction/2014/ma-brokers-013114.pdf.

The staff defined a M&A Broker as “a person engaged in the business of effecting securities transactions solely in connection with the transfer

A German company sought the Staff’s assurance that it does not have to register as a broker-dealer if it is retained outside the U.S. by non-U.S. clients in connection with certain M&A transactions, initiates contact directly with potential U.S. targets, and engages in additional activities regarding the U.S. targets.

The M&A transactions may involve the

A popular two-tier merger and acquisition structure may trigger certain prohibitions under the Securities Exchange Act of 1934.  In particular, this problem relates to the so-called “Burger King” structure, arising from the private equity fund acquisition of the fast-food chain by a private equity fund, and its simultaneous pursuit of a tender offer and a traditional one-step merger. 

The Burger

Corporate officials, who did not disclose merger talks with a competitor, did not commit securities fraud.  See Filing v. Phipps, 6th Cir., No. 11-4157, 10/23/12, http://federal-circuits.vlex.com/vid/mark-filing-v-william-phipps-403576058

The court determined that the discussions were at the time not material, thus, not requiring disclosure.  This transaction involved tortured negotiations that did not culminate until 16 months later and well after