An SEC Commissioner Hears and Heeds the Call to Rationalize the Private Placement Broker (“Finder”) Industry

As previously noted in this blog (see “Private Placement Brokers Await Attention by SEC” June 6, 2017) and in this firm’s sister blog (see “Private Placement Brokers Should be Legalized along with M&A Brokers” in the RIA Compliance Blog, Jan. 21, 2015), there has long been a large gray market of unregistered private placement brokers. Also see “Report and Recommendations of the Task Force on Private Placement Broker-Dealers” (American Bar Association Business Law Task Force, 2005). This cadre, often call themselves “finders,” in the vain hope that such self-description will enable them to escape regulation as a securities Broker/Dealer, which they clearly are by definition. Finders have continued to operate in plain sight, with little response from the SEC other than the issuance of a few inconsistent no-action letters and an occasional enforcement action against such brokers whose conduct was egregious in other ways.…

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