H.R. 8328: Defining Dealer Act

This bill, titled the Defining Dealer Act, seeks to amend the definition of the term "dealer" within the context of the Securities Exchange Act of 1934. The purpose of this change is to clearly define who qualifies as a dealer in securities and to update related legal language. The main elements of the bill are as follows:

Definition of Dealer

The bill proposes that the term "dealer" refers to any person or entity engaged in the business of executing securities transactions for customers in two key ways:

• By purchasing securities from customers for their own account, intending to sell them elsewhere.
• By selling securities to customers that they have previously acquired for their own account from another source.

Effective Date

The changes outlined in the new definition of "dealer" will take effect 30 days after the bill is officially enacted into law.

Treatment of Certain Orders and Judgments

The bill also includes provisions for handling current and prior legal actions related to the definition of dealers:

• Transition Period: If a legal action is taken between the enactment of this bill and the date the new definition takes effect, and that action would not have been filed under the new definition, it must be vacated (canceled) by the relevant court or the Securities and Exchange Commission (SEC) within five years of the bill's enactment.
• Prior Judgments: Any legal action that took place before the bill's enactment that would not have occurred if the new definition was in place must be vacated as soon as possible by the court or the SEC.
• Covered Action: The term "covered action" refers to any order or judgment made by a court or the SEC, including consent orders.

Conclusion of Legislative Process

The bill has been introduced and referred to the Committee on Financial Services for consideration, but it does not yet have any pending votes.

Relevant Companies

• GS - Goldman Sachs: As an investment bank and financial services company, Goldman Sachs could be significantly impacted by changes in dealer definitions, potentially affecting their trading and market-making activities.
• JPM - JPMorgan Chase: Being a major provider of investment and securities services, JPMorgan Chase's dealings in the market could also be influenced by this new definition of a dealer.
• MS - Morgan Stanley: Similar to Goldman Sachs, Morgan Stanley operates in the space of securities transactions, and adjustments to the dealer definition may directly affect their business operations as well.