Pushing Back Against the SEC on Finders Rules

As I’ve blogged about in the past, the SEC in recent years has taken a relatively strict position against payments to “finders” who are not registered broker-dealers, as compensation for introducing investors to companies. The SEC’s focus has primarily been on “transaction-based compensation,” i.e., payment to the finder that is contingent on investment by the introduced investor, which according to the SEC is a hallmark of broker-like activity that requires registration. Many practitioners, along obviously with those who would like to earn a few bucks by making these introductions, have complained that the SEC’s view is too restrictive. A company proposing to do business as an unregistered finder, Platform Real Estate Inc., has now filed suit in the Southern District of New York against the SEC, seeking a declaratory judgment to the effect that broker-dealer registration is not required for the plaintiff and similar companies acting as…

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