The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
The SEC has proposed new rules that would clear up the
longstanding difficulty a venture capital fund manager has faced
when wanting to use a "finder" for investors in the fund
and such "finder" is not licensed as (or associated with
a licensed) broker-dealer. This article discusses the
application of the proposed new rule to venture capital fund
managers, but note that the proposed rule is impactful for managers
of other types of private funds as well as private companies.
Unregistered "finders" have long been a fixture in the
venture capital community, and a source of considerable regulatory
uncertainty. Based on SEC guidance dating back to the early
1990's, a so-called "finder's exemption" was
thought to exist whereby a person could perform the limited
function of introducing investors to an issuer,
