Still Room for Finders? Courts Question SEC View of Broker Activity
Small to mid-sized businesses are oftentimes approached by “finders” offering to introduce them to potential investors in exchange for a fee based on a percentage of the amount raised if the investors invest. Many of these finders operate without registering as “brokers” with the Securities and Exchange Commission, even though the SEC considers the receipt of such “transaction-based compensation” brings the finder within the definition of a “broker” under the Securities Exchange Act of 1934 If someone is acting as a broker and is not registered, a violation of Section 15(a) of the Exchange Act has occurred.
In his article, "Still Room for Finders? Courts Question SEC View of Broker Activity," Partner Stephen Goodman analyzes Section 15(a) and recent court decisions that seem to question the SEC’s interpretation of broker activity.
To read the entire article, published in BNA Securities Regulation & Law Report, please click here.
