M&A broker exemption under section 15(b)(13): who it covers and what it does not

The short answer

Section 15(b)(13) of the Securities Exchange Act lets an M&A broker help transfer ownership of a small private company without registering with the SEC as a broker, provided the company passes the size tests and the broker meets the conduct conditions. It is a narrow, transaction-specific exemption. It is not a finder exemption, it does not cover capital raising, it does not override state registration rules or FINRA obligations, and it says nothing about introductions for data licensing.

Where the exemption came from

Congress added the exemption in the Consolidated Appropriations Act, 2023, signed on December 29, 2022. It took effect on March 29, 2023, and SEC staff withdrew the 2014 M&A Brokers no-action letter the same day, as Morrison & Foerster's alert records. The statutory text sits in 15 U.S.C. 78o. Law firms noted at the time that the statute is narrower than the 2014 no-action relief and applies only to M&A transactions involving small private companies (Jones Day).

The background rule matters. Section 15(a) generally makes it unlawful for an unregistered broker to effect, or induce or attempt to induce, securities transactions, and lets the SEC exempt brokers by rule or order. Whether a person is acting as a broker depends on what they actually do; the SEC's Guide to Broker-Dealer Registration explains the definitions, though it predates the 2023 statute.

The eligibility tests at a glance

Read the statute itself before relying on any summary, including this one. The conditions interact, and a single failed condition takes the transaction outside the exemption.

How it applies in common advisor situations

What the exemption does not do

• It is not a finder exemption. The SEC proposed a conditional exemption for finders in private capital raising in 2020 but did not finalize it, as the SEC's own July 2025 advisory committee agenda states. Neither that proposal nor section 15(b)(13) is a safe harbor for referral partners.
• It does not cover capital raising. Placing equity or debt for a client is outside it.
• It does not change FINRA obligations. Registered people remain subject to FINRA rules and their firm's policies.
• It does not preempt the states. State registration requirements still need their own analysis.
• It does not reach commercial contracts that are not securities transactions, such as a license of a company's data.

Where a SourceX introduction sits

A SourceX introduction connects a company with a data licensing process. The company keeps ownership of the business and of its data, grants a license (typically exclusive for AI training for an agreed term), and receives one all-in price as a one-time payment. No shares change hands and no ownership transfers. That is why the M&A broker exemption is not the relevant framework for the introduction, and SourceX does not present it, or any other exemption, as covering its partners. If you are unsure whether any registration or licensing rule applies to what you do, ask securities counsel and, if you are registered, your compliance team.

For an advisor with a live mandate, three practical points follow:

1. Disclose the reward to the client in writing. Partners earn 25% of the eligible platform fees SourceX actually collects from the referred company's licensing deals, capped at $100,000 per referred company; rewards become payable only after the buyer pays and SourceX receives its fee, and no reward is guaranteed. The reward is a share of SourceX's fee and never reduces what the client receives.
2. Read your engagement letter. Look for exclusivity, fee-tail or conflict clauses that could touch a separate payment connected to the same client.
3. Time the license against the sale process. An exclusive AI-training license is a contract that will surface in buyer diligence, so decide with the client and deal counsel whether it should close before signing, between signing and closing, or after.

How the introduction works for an M&A advisor

Raise it with sell-side clients that are US businesses which peaked at 50+ full-time employees (contractors excluded), have run for several years, can license their records and have an owner or executive ready to sponsor the work. The company fit checker gives a quick, non-binding read before you raise it.

1. You register, then send the seller or CEO your referral link, or submit the company through the referral form.
2. SourceX checks size, operating history, breadth of records and rights with the company's sponsor.
3. The company lists its systems, years of history and exportable records in a data inventory.
4. SourceX and the company agree one all-in price and the license terms before buyers see anything.
5. AI labs and data buyers review the opportunity; once a company is deal-ready, buyers typically respond within about two weeks.
6. The company signs, delivers under redaction rules agreed in advance, and is paid; your reward follows once SourceX receives its fee.

You never export, upload or describe the client's confidential records. Your role ends at the introduction and basic fit information.

Questions to ask your counsel or compliance team

• Does every condition of section 15(b)(13) hold for this mandate, including the prior fiscal year size test and the buyer's plans to manage?
• Which state registration rules apply to the deal, and to me?
• If I am registered, does my firm treat a SourceX referral as an outside activity, and what approval does it need?
• Does my engagement letter require me to disclose or share third-party compensation with the client?
• Could the timing or exclusivity of a data license affect the sale process or the purchase agreement?

This is general information, not legal, tax or financial advice. Confirm with your own counsel, tax adviser or professional body before acting.

Next step

Advisors who also sit on client boards should read whether a board member can earn a referral reward, and those inside CPA firms should check whether a CPA can accept a referral fee. For the wider picture, see referral opportunities for M&A advisors and the program terms. When you have a client in mind, register as a partner.