Finders, Keepers: SEC Proposes Safe Harbor Framework for Unregistered Finders

Latham & Watkins LLP

The proposal would significantly impact finders by granting tailored exemptive relief to individuals engaging in limited capital raising activity.

Key Points:

..The Proposal would provide a conditional exemption that would allow natural persons to engage in certain limited capital raising activities without needing to register as a broker (sometimes referred to as a broker-dealer) under the registration requirements of the Securities Exchange Act of 1934 (Exchange Act).

..The Proposal would create two tiers of “finders” subject to certain conditions that are tailored to the scope of their respective activities.

..The Proposal would allow unregistered finders that comply with the conditions of the exemption to receive transaction-based compensation without being subject to sales practice and other requirements applicable to registered broker-dealers.

Please see full Alert below for more information.

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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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