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February 27, 2018 at 10:53 AM
Hester Peirce, the newest Republican commissioner at the Securities and Exchange Commission, wants the agency to create a regulatory regime for “finders” in small-business capital formation transactions.
Lack of regulations for finders — who help small businesses identify potential investors to help raise capital — has been “a problem for some time,” Peirce said Friday at the SEC Speaks conference in Washington, which is sponsored by the Practising Law Institute.
As it stands now, such finders must be registered as broker-dealers, despite the fact that it’s “not the main job of those associates,” said Peirce, adding that she’d like to explore setting up “a regulatory regime that works for them.”
Lawyers, for instance, can act as finders for capital. “Because it’s not their main business, they’re not going to want to register” as broker-dealers, Peirce told ThinkAdvisor after her remarks at the conference. The “goal would be to set up a regime so that these people who are engaged in this on the side don’t have to register as full broker-dealers,” she added. Devising such a strategy is “something that’s on my agenda to work on.”
The SEC’s Advisory Committee on Small and Emerging Companies sent a proposal to SEC Chairman Jay Clayton last May setting out steps the agency could take regarding the regulation of finders and other intermediaries in small-business capital formation transactions.
