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Finders and Unregistered Broker-Dealers: Understanding the Risks and Recent Developments

Avoiding the Pitfalls of Broker-Dealer Registration Violations, Lessons From SEC Enforcement Actions and SEC Guidance

Recording of a 90-minute premium CLE video webinar with Q&A

This program is included with the Strafford CLE Pass. Click for more information.
This program is included with the Strafford All-Access Pass. Click for more information.

Conducted on Wednesday, May 31, 2023

Recorded event now available

or call 1-800-926-7926

This CLE course will analyze the legal pitfalls for securities issuers who utilize unregistered "finders" to solicit investors, the SEC's restrictive position on permissible activities of finders, activities that require broker-dealer registration, and SEC regulatory actions regarding unregistered broker-dealers.


On Oct. 7, 2020, the SEC proposed a conditional exemption for finders, which would operate as a nonexclusive safe harbor from the broker registration requirements of Section 15(a) of the Securities Exchange Act of 1934. The proposed exemption would permit natural persons to engage in certain limited activities on behalf of issuers with private placement offerings. The SEC received over 90 comment letters overwhelmingly critical of the proposal, including state regulators. Unfortunately, no further action has been taken with respect to the proposal, but it remains instructive on the status of brokers and finders.

More recently, on Mar. 28, 2022, the SEC proposed two rules that would clarify the meaning of certain terms in the statutory definitions of "dealer" and "government securities dealer" under, respectively, Sections 3(a)(5) and 3(a)(44) of the Exchange Act. The rules would encompass liquidity providers in the markets--firms that were previously relying on the trader exemption.

Fund managers and companies can be subject to SEC enforcement actions for aiding and abetting a finder's violation of the broker-dealer registration requirements. Besides SEC sanctions, the use of an unregistered broker-dealer brings the risk of rescission under federal and state securities laws. Involving finders in capital raising thus carries significant risks and there is no safe harbor or clear distinction of a finder's duties in the securities laws.

Listen as our authoritative panel of securities practitioners discusses legal pitfalls for securities issuers using unregistered "finders" to solicit capital and the SEC's position on unregistered brokers' permissible activities.



  1. Securities laws applicable to activities of unregistered broker-dealers
  2. The SEC's proposed conditional exemption for finders
  3. The SEC's proposed rulemaking to clarify the definition of dealer and government securities dealer
  4. Finders under various states' laws
  5. Finder-related exemptions, including M&A brokers, JOBs Act, bulletin boards, crowdfunding portals
  6. Regulatory enforcement actions


The panel will review these and other key issues:

  • Activities requiring broker-dealer registration with the SEC and FINRA
  • Legal pitfalls for issuers who use unregistered broker-dealers in capital-raising efforts
  • Finder-related exemptions


Man, Pablo
Pablo J. Man

K&L Gates

Mr. Man is a partner in the firm's asset management and investment funds practice. He represents investment...  |  Read More

Rohrer, Eden
Eden L. Rohrer

K&L Gates

Ms. Rohrer concentrates her practice in securities broker-dealer regulatory, compliance, enforcement defense,...  |  Read More

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