FINRA Clarifies When Capital Acquisition Brokers May Accept Equity Securities as Payment

FINRA staff clarified that a capital acquisition broker ("CAB") may, under certain conditions, accept equity securities issued by privately held companies as compensation for its services.

In an interpretive letter, FINRA staff stated that a CAB may accept equity securities, including warrants, issued by privately held companies as payment from clients as long as the CAB only engages in services permitted under CAB Rule 016(c)(1) ("Definitions"), and does not engage in activities prohibited under CAB Rule 016(c)(2).