SEC Proposes Expanded Exemption For "Finders"

At an open meeting of the Securities and Exchange Commission on October 7^th, the Commission approved issuance of a proposed conditional exemptive order that would allow “finders” to engage with accredited investors in connection with a private securities offering without registering as brokers under the Exchange Act.

The regulatory status of finders has been a recurring issue for businesses accessing the private capital markets. In particular, smaller businesses are often reliant on the services of finders to connect with in investors who are interested in supporting emerging enterprises. The Commission's proposed order would provide frequently requested clarity on precisely what activities a finder may engage in without triggering registration requirements for brokers.