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Course Details

Course Information
  • smart_display Format

    On-Demand

  • signal_cellular_alt Difficulty Level

    Intermediate

  • work Practice Area

    Banking and Finance

Date & Time
  • event Date

    Wednesday, May 31, 2023

  • schedule Time

    1:00 p.m. ET./10:00 a.m. PT

  • timer Program Length

    90 minutes

Credit Information

  • This 90-minute webinar is eligible in most states for 1.5 CLE credits.

$347.00
CLE
ALL

This CLE course will analyze the legal pitfalls for securities issuers who utilize unregistered "finders" to solicit investors, the SEC's restrictive position on permissible activities of finders, activities that require broker-dealer registration, and SEC regulatory actions regarding unregistered broker-dealers.

Faculty

Eden L. Rohrer
Of Counsel
K&L Gates Llp - Washington

Ms. Rohrer concentrates her practice in securities broker-dealer regulatory, compliance, enforcement defense, litigation and arbitration matters in the financial services and fintech industries. She advises emerging and established companies on the development, regulation and operation of funding portals, capital raising platforms and trading platforms, including in connection with angel investing, crowdfunding, in the private and public securities markets. Ms. Rohrer’s practice involves all aspects of broker-dealer regulation, including Self-Regulatory Organization membership, cross border transactions and chaperoning of foreign broker-dealers (under SEC Rule 15a-6). She also provides regulatory guidance to investment banking clients in connection with securities offerings and related trading issues. Ms. Rohrer is a leader in the M&A Broker space as one of the six lawyers who authored the request to the SEC for No-Action relief for mergers and acquisition brokers—the M&A Brokers No-Action Letter. The M&A Brokers Letter allows M&A brokers to receive transaction-based compensation without registering as securities brokers with the SEC.   

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Pablo J. Man
Partner
K&L Gates, LLP

Mr. Man is a partner in the firm's asset management and investment funds practice. He represents investment advisers, closed-end funds (including exchange-traded closed-end funds, registered funds of hedge funds, and interval funds), alternative mutual funds, and private funds (including hedge funds and funds of one).

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Description

On Oct. 7, 2020, the SEC proposed a conditional exemption for finders, which would operate as a nonexclusive safe harbor from the broker registration requirements of Section 15(a) of the Securities Exchange Act of 1934. The proposed exemption would permit natural persons to engage in certain limited activities on behalf of issuers with private placement offerings. The SEC received over 90 comment letters overwhelmingly critical of the proposal, including state regulators. Unfortunately, no further action has been taken with respect to the proposal, but it remains instructive on the status of brokers and finders.

More recently, on Mar. 28, 2022, the SEC proposed two rules that would clarify the meaning of certain terms in the statutory definitions of "dealer" and "government securities dealer" under, respectively, Sections 3(a)(5) and 3(a)(44) of the Exchange Act. The rules would encompass liquidity providers in the markets--firms that were previously relying on the trader exemption.

Fund managers and companies can be subject to SEC enforcement actions for aiding and abetting a finder's violation of the broker-dealer registration requirements. Besides SEC sanctions, the use of an unregistered broker-dealer brings the risk of rescission under federal and state securities laws. Involving finders in capital raising thus carries significant risks and there is no safe harbor or clear distinction of a finder's duties in the securities laws.

Listen as our authoritative panel of securities practitioners discusses legal pitfalls for securities issuers using unregistered "finders" to solicit capital and the SEC's position on unregistered brokers' permissible activities.

Outline

  1. Securities laws applicable to activities of unregistered broker-dealers
  2. The SEC's proposed conditional exemption for finders
  3. The SEC's proposed rulemaking to clarify the definition of dealer and government securities dealer
  4. Finders under various states' laws
  5. Finder-related exemptions, including M&A brokers, JOBs Act, bulletin boards, crowdfunding portals
  6. Regulatory enforcement actions

Benefits

The panel will review these and other key issues:

  • Activities requiring broker-dealer registration with the SEC and FINRA
  • Legal pitfalls for issuers who use unregistered broker-dealers in capital-raising efforts
  • Finder-related exemptions