Is the Tide Turning Against the SEC in Favor of Finders?

November 17, 2011Articles ABA Securities Litigation E-Newsletter

“Finders” or “business brokers” may be the unsung heroes of early-stage companies, or, as the U.S. Securities and Exchange Commission (SEC) believes, they may be unregistered broker-dealers. Finders raise capital for companies that might not otherwise have capital on their own or, more importantly, would not draw the attention of investment bankers, who by definition are licensed broker-dealers. Finders and those who employ them must be aware of the risks associated with their services and the requirements imposed on them by the federal securities laws. Companies or individuals who intend to use a finder—or those engaged as one—must be aware that certain activities require registration, the lack of which may bring about serious consequences.

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