The attached SEC order was released this summer regarding a group who, for several years, acted as intermediaries in the PIPEs market. The Securities and Exchange Commission found that the intermediaries should have known that they were required to register as a securities broker or dealer and by engaging in their course without registering, willfully violated the broker/dealer registration provisions of the Securities Exchange Act of 1934. See attached order for full details and sanctions. Download SEC Case - RAM Capital.
A good discussion of this case can be found on VC Expert's Buzz: Buzz Article: SEC Files Warning Shots to Unregistered Finders. Here is an excerpt:
"The SEC found that Michael E. Fein and Stephen E. Saltzstein, neither of whom was registered as a broker or associated with a registered broker-dealer, operated and controlled Ram Capital as an unregistered broker-dealer while serving as its principals. Specifically, from 2001 through early 2005, Ram engaged in the business of identifying, structuring, and soliciting investors for PIPE offerings. The respondents and the SEC entered into Offers of Settlement with respect to the charges contained in the Order."
The article goes on to say:
"We believe this Administrative Order may be a significant development in the enforcement of regulations related to persons and entities whose activities may be considered to be in the business of effecting transactions in securities and requiring registration as a broker-dealer. Most, if not all, of the limited number of enforcement actions in this area have usually been combined with allegations or findings of fraud or other misconduct. This appears to be an action aimed solely at the activities of the respondents without allegations of other misconduct."
This last thought is significant. It is clear that M&A and Investment Banking activities are on the radar of our regulators.
