"Finders" and Corporate Finance: Permissible Finder Activity Under Federal Securities Laws

Startup companies as well as more mature companies are often approached by people willing to connect them with sources of financing.  Such finders typically want to receive transaction-based compensation, meaning that their compensation depends on the quality of the introductions and the success and size of the funding round.

This program, presented by Arina Shulga, Partner at Nelson Mullins will explore the federal securities laws, the SEC no-action letters, and the federal cases for an answer to the question of whether finder's activity is permissible under the existing laws and if yes, then what are the questions that counsel should ask the company client when seeking to determine the scope of permissible activities. The program will also discuss the legal consequences of using the services of an unregistered broker.

This will benefit attorneys advising corporate clients that are seeking to raise funds from outside investors.

Learning Objectives:

1. Break down the definition of a "broker" and possible penalties for using the services of an unregistered broker
2. Explore the origins of a "finder's exemption"
3. Recognize questions to ask and areas of concern when evaluating a potential broker activity
4. Analyze court cases and understand the tests developed by the courts
5. Identify the proposed finder's exemption