SEC Chair Jay Clayton and Commissioner Hester Peirce encouraged the Small Business Advisory Committee (the "Committee") to consider the SEC proposed "finders" exemption from broker-dealer registration.
As previously covered, the SEC proposed to establish a new limited and conditional exemption from the broker registration requirements in Exchange Act Section 15(a) for natural persons engaging in certain limited capital-raising activities on behalf of issuers seeking to raise funds from accredited investors.
Mr. Clayton described the lack of clarity on the topic included confusion by small businesses looking to engage finders, and of individuals seeking to avoid engaging in activity potentially requiring registration as brokers. Mr. Clayton stated that meaningful guidance in this area has not advanced "since the days of gas lines, disco and parachute pants," and is "long overdue". Mr. Clayton noted the potential of the proposed order to connect small businesses in need of capital with investors interested in emerging enterprises, particularly in light of the impact of COVID-19 on small businesses.
Ms. Peirce asked the Committee to consider ambiguities surrounding the proposed exemptive framework, including (i) potential limitations presented by state securities laws, (ii) the requirement to be a natural person to qualify for the exemption, (iii) the scope of the activities, and (iv) the availability of the exemption for a secondary offering.
The SEC proposed to establish a new limited and conditional exemption from the broker registration requirements for natural persons engaging in certain limited capital-raising activities on behalf of issuers seeking to raise funds from accredited investors.
Available only to Cabinet Premium subscribers.
Combining regulatory and enforcement news, analysis, and practical work tools on an easy-to-use digital platform.