SEC's Recent Denial of No-Action Regarding Finders

For those parties who believe that the outdated and narrow Paul Anka letter serves as a green light for acting as a Finder in capital raising, debt placement or M&A deals without becoming registered as a broker/dealer ("BD") or becoming a registered agent of a BD, it may be time to reconsider. 

Last month the SEC issued the attached Denial of No-Action Request to Brumberg, Mackey & Wall, P.L.C.("BMW").  In the BMW letter, as it has come to be known, SEC staff states that “the introduction to [the company] of only those persons with a potential interest in investing in [its] securities implies that BMW anticipates both ‘pre-screening’ potential investors to determine their eligibility to purchase the securities, and ‘pre-selling’ [the company’s] securities to gauge the investors’ interest.”  The staff also stated that “the receipt of compensation directly tied to successful investments in [the company’s] securities by investors introduced to [the company] by BMW (i.e., transaction-based compensation) would give BMW a ‘salesman’s stake’ in the proposed transactions and would create a heightened incentive for BMW to engage in sales efforts.”  Download SEC- denial of no action_BMW

I've also attached a discussion titled "Use of Finders in Securities Transactions," authored by Wayne Lee, a member of the Corporate and Securities Practice in Greenberg Traurig's Tyson Corner office.

 Download GT - Use of Finders in Sec Transactions

Though Anka  wrote the famous words "I did it my way," I wouldn't recommend doing it his way in 2010.

Comments

[Forex Trading Broker]

This sure makes me happy! In my career I have always preferred dealing with professionals, who know what they are doing. Great news for the market!