Is An Issuer Responsible For The Acts Of Its Unregistered Finder?


The SEC has consistently opposed the use of unregistered finders to help companies raise money. In a recent pair of cease and desist orders, the SEC has raised the stakes, not only for finders, but also for the companies that use them.

Under these orders, if the finder is found to be a broker and has failed to register, as required by Section 15(a) of the Securities Exchange Act of 1934, the finder’s violation may now support regulatory action against the company which engages the finder, as well as other companies which may have a role in the offering.

Pryor Cashman Partners Stephen M. Goodman and Bertrand C. Fry and Of Counsel Michael T. Campoli, all members of the firm's Corporate and Investment Management groups, have authored a legal update analyzing the background and the implications of these orders, entitled Is An Issuer Responsible For The Acts Of Its Unregistered Finder?"

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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