SEC Wants Leeway for “Finders”

By Stephen Barlas
January 1, 2021

With the intention of expanding financing options for small companies, the U.S. Securities & Exchange Commission (SEC) wants to expand its “conditional” exemption for broker registration for “finders.”


Finders are generally small companies that serve as intermediaries between companies looking for equity or debt financing in the private market and “accredited investors,” a category for which the SEC recently expanded definitions.


The proposal would create two classes of finders, Tier I Finders and Tier II Finders, neither of whom have to register as broker-dealers and are therefore exempt from certain requirements. They would also be limited in terms of what they could do in soliciting investors for companies.


A former SEC official and now Washington attorney said the exemption from Section 15(a) of the Securities Exchange Act of 1934 means consumer groups may be wary of backing the new finder tiers because of concerns that it may make it more difficult to police fraudulent actors. That said, she added the proposal would be especially useful to small companies that often can’t find broker-dealers who want to be part of a small offering.


Stephen Barlas has covered Washington, D.C., for trade and professional magazines since 1981 and since 1984 for Strategic Finance and its predecessor Management Accounting. You can reach him at sbarlas@verizon.net.
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