Finders and Unregistered Broker-Dealers: Understanding the Risks and Recent Developments

Mr. Man primarily represents investment advisers, registered closed-end funds (including tender offer and interval funds), and private funds (including exchange funds, hedge funds, and funds of one). His practice centers on regulatory matters relating to the Investment Advisers Act of 1940. Mr. Man also brings substantial experience to the formation of pooled investment vehicles both registered and exempt from registration under the Investment Company Act of 1940. Mr. Man is highly knowledgeable in the application of the Securities Act of 1933 to private investment funds as well as continuously-offered registered closed-end funds offering their interests in private placements, encompassing offerings without and with a general solicitation. He counsels investment advisers ranging from emerging managers to large global firms on all aspects of their operations, including registration and “status” questions, regulation and reporting, SEC examinations, seeding arrangements, and mergers and acquisitions. Among other things, Mr. Man guides clients on matters relating to custody, recordkeeping (including electronic records), trading, principal and cross-transactions, best execution, performance advertising, fiduciary duty and conflicts. He also has a significant practice counseling clients with respect to “wrap” and model portfolio programs. With respect to registered funds, Mr. Man acts as fund and independent trustee counsel. In addition, he regularly advises fund sponsors and finders with respect to broker “status” issues, including the so-called issuer exemption under Rule 3a4-1, in connection with offers and sales of fund securities.

Ms. Rohrer specializes in securities broker-dealer regulatory matters, including broker-dealer status analysis, registration, compliance, and enforcement defense. She represents a broad range of clients in connection with traditional broker-dealer activities and activities involving new technologies such as digital assets, cryptocurrencies, utility tokens, NFTs, distributed ledger technology, digital wallet providers, DeFi applications and protocols and Web3-related businesses. Ms. Rohrer’s broker-dealer practice includes the assessment of whether proposed activities require broker-dealer registration or qualify for an exemption. She can confidently walk clients through the minefield of broker-dealer status and consider exemptions, including the safe harbor for associated persons of an issuer (SEC Rule 3a4-1), foreign broker-dealers (SEC Rule 15a-6), technology platforms and communications networks, and M&A brokers. Clients frequently seek her counsel on whether “finders” can participate in securities transactions.