SEC Proposes Conditional Exemption For "Finders"

On October 7, 2020, the U.S. Securities and Exchange Commission (the "SEC") published a proposed conditional exemption for certain natural person "Finders" (the "Finders Exemption Proposal").¹ The Finders Exemption Proposal is intended to provide a non-exclusive safe-harbor from broker-dealer registration under Section 15(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), to natural persons engaging in certain limited activities on behalf of issuers ("Finders") (the "Finders Exemption"), as well as clarify the ability of Finders to engage in certain non-registrable activities with respect to private, primary offerings.

Background of Finders

A long-standing issue in broker-dealer regulation is the regulatory status of so called "finders." Section 3(a)(4) of the Exchange Act generally defines "broker" as "any person engaged in the business of effecting transactions in securities for the account of others."² Section 15(a)(1) of the