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

Mr. Lacarrubba is a partner in the firm’s Asset Management and Investment Funds practice, with a focus on broker-dealer regulatory, compliance, operational and transactional matters. His practice includes advising broker-dealers on a broad array of corporate, regulatory, transactional, and operational matters and proprietary trading firms, hedge funds, registered investment companies and other financial institutions on their interactions with broker-dealers and various aspects of financial market regulation and trading practices. Mr. Lacarrubba also has extensive experience counseling sell-side institutions on matters arising under the rules of the SEC, FINRA, and all major US registered securities exchanges, including alternative trading system (ATS) regulation, best execution compliance, Regulation SHO, Regulation M, Regulation NMS, the Market Access Rule, net capital (15c3-1) and customer protection (15c3-3) rules, and regulatory reporting obligations (e.g., Consolidated Audit Trail (CAT), Electronic Blue Sheet (EBS), Trade Reporting and Compliance Engine (TRACE), Trade Reporting Facility (TRF), and Large Option Position Reporting (LOPR). In addition to advising broker-dealers on regulatory requirements and assisting with the development of their supervisory procedures and risk management practices, he routinely represents broker-dealers in SEC, FINRA and exchange investigations and exams involving complex regulatory or trading issues and on various corporate and transactional matters, such as negotiating agreements and the FINRA new member (NMA) and continuing member (CMA) application processes.   

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.