SEC’s New GOP, Democratic Members to Work Together on ‘Finders’

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By Andrew Ramonas

The SEC’s two newest members said Feb. 23 they have joined forces to look into a better regulatory regime for “finders,” middlemen who help companies locate investors.

Commissioner Hester Peirce, a Republican, and Commissioner Robert Jackson, a Democrat, said they think they can make progress on clarifying Securities and Exchange Commission rules for the intermediaries, who may have to register as broker-dealers under current regulations.

Their remarks at the Practising Law Institute’s annual SEC Speaks conference in Washington come after the agency’s Small and Emerging Companies Advisory Committee repeatedly urged the commission to clear up regulatory ambiguities for finders.

“We’re looking for things we can work on together,” Jackson told Bloomberg Law and other media outlets. “I’m keen about the possibility of us doing better in that space. My concern, as with almost all things, is investor protection. I worry that those who are working with finders are going to wind up not being protected the way securities laws say” they should be.

Federal securities laws and regulations don’t have a specific definition for finders. The individuals, however, may have to register as brokers depending on how involved they are in the business of selling securities.

No Specific Plan

The commissioners didn’t outline a specific plan for finders, though Peirce said the middlemen could see less regulation by separating them from the broker regulatory regime.

“It fits nicely with the chairman’s agenda of helping capital formation, making sure that our rules work effectively for companies that are trying to raise money,” said Peirce, referring to SEC Chairman Jay Clayton.

Jackson and Peirce joined the commission in January.

To contact the reporter on this story: Andrew Ramonas in Washington at aramonas@bloomberglaw.com

To contact the editor responsible for this story: Seth Stern at sstern@bloomberglaw.com

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