The Gray Area of Finders
A long-standing issue in the area of broker regulation concerns the regulatory status of unregistered persons acting as funding intermediaries between small businesses and investors. The Commission has not previously recognized a finders exemption or exception, nor has the Commission adopted a rule clearly specifying whether and under what circumstances a person may solicit potential investors without being required to register. Instead, market participants were forced to analyze various informal staff positions, no action letters, and court decisions to decide whether a finder’s conduct in a specific instance triggered registration. The proposal would bring clarity to the analysis, at least with respect to the limited circumstances under which it applies.