Advisory Committee on Small and Emerging Companies Recommends Clarity on Finders
As a result of the May 10th meeting of the SEC Advisory Committee on Small and Emerging Companies(ACSEC), the Committee recommended that the SEC take action in the near future to provide certainty in the context of finders and platforms involved in primary and secondary securities transactions.
To date, the SEC has never actually defined ‘finders’. This is much to the disappointment of the Advisory Committee on Small and Emerging Companies.
The ACSEC recommended that the SEC: “The Commission take action in the near future to provide certainty in the context of finders and platforms involved in primary and secondary securities transactions. The range of potential options includes compliance or enforcement efforts, rule making, or coordination with the states.Even staff guidance such as Q&A’s as to what constitutes broker-dealer activity would be tremendously helpful.“
The ACSEC made the above recommendation after considering the following points:
1) Identifying potential investors is one of the most difficult challenges for small businesses
trying to raise capital.
2) There is significant uncertainty in the marketplace about what activities require brokerdealer
registration. Companies that want to play by the rules struggle to know in what
circumstances they can engage a “finder” or platform that is not registered as a brokerdealer.
3) For years, many interested parties have urged the Commission and its staff to take steps
to address this ambiguity. As one recent example, in 2015, this Committee recommended
that the Commission “take immediate intermediary steps to begin to address issues
regarding the regulation of intermediaries in small business capital formation
transactions….”
4) The Committee is disappointed the Commission has not taken actions to help to address
these concerns despite repeated and longstanding requests.
Learn more HERE.