On October 7, 2020, the SEC proposed the creation of “limited, conditional” exemptions from broker-dealer registration for certain “finders” in private company capital raising transactions. This has long been a problem area for private companies, as current regulations impose restrictions that may prevent them from using unregistered finders to raise capital, or impose draconian penalties on them if they do. Since these companies are often unable to raise capital on their own and normally do not have access to the efforts of established, registered broker dealers, the already difficult challenge of raising early stage capital is made even more difficult. The SEC’s October 7, 2020 Press Release and Fact Sheet lay out these proposed exemptions in detail, and the Fact Sheet contains links to a chart and a video that may be helpful.
It’s too early to tell if these proposed exemptions will be beneficial to small companies. Will they actually facilitate small companies’ ability to raise early stage capital? That remains to be seen, but it’s a positive sign that the SEC is expending at least some efforts to help small companies in their capital raising efforts.
Here are the high points of the proposed exemptions:
Continue Reading Will Finders Find Relief from SEC Restrictions?