A recently proposed Securities and Exchange Commission (“SEC”) exemption from broker-dealer registration may make it easier for small and medium-sized businesses to raise capital from accredited investors, but questions remain.
On October 7, 2020, the SEC voted to propose a new exemption (the “Proposed Exemption”) to the broker-dealer registration requirements for “Finders,” a designation that would become available to qualifying individuals who connect private companies seeking capital with accredited investors. The Proposed Exemption would provide relief from current securities laws that make it illegal or impractical for individuals to introduce companies seeking capital to potential investors, and could open new sources of financing to entrepreneurs.
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