Vanishing Breed: The Narrowing Opportunities for Unregistered Finders

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For many years, finders (people who assist companies in finding private funding and are paid with a percentage of the amount raised) have been advised that they did not have to register as “brokers” with the Securities and Exchange Commission (SEC) if they limit their activities to making introductions and they do not otherwise participate actively in the transaction.

In a special article published by the BNA Securities Regulation and Law Reporter, Pryor Cashman Partner Stephen Goodman describes recent developments indicating that the SEC is taking a stricter view of fundraising activities conducted by “finders,” “business brokers” and others whom the SEC regards as unregistered brokers of securities. The article, entitled “Vanishing Breed: The Narrowing Opportunities for Unregistered Finders," also addresses the legal risks to issuers raised by using an unregistered broker to effect a sale of securities or of a business.

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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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