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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

A live 90-minute premium CLE video webinar with interactive 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.

Tuesday, July 8, 2025 (in 8 days)

1:00pm-2:30pm EDT, 10:00am-11:30am PDT

or call 1-800-926-7926

This CLE course will analyze the legal pitfalls for securities issuers who utilize unregistered brokers and "finders" to solicit investors. The panel will provide an overview on activities that require broker-dealer registration, permissible activities, and state law considerations for finders, recent case law against unregistered dealers, and the recent federal decision vacating the SEC's rules expanding the definitions of "dealer" and "government securities dealer."

Description

Historically, the SEC has not been aggressive in bringing enforcement actions for broker-dealer registration violations, except in cases involving certain types of disfavored conduct and more recently against participants involved in the cryptocurrency industry. The SEC under the current administration, however, has been dismissing those cases and has been reducing its enforcement efforts across the board.

Additionally, the SEC's 2024 rulemaking to expand the definitions of "dealer" and "government securities dealer" (the "Dealer Rule") was vacated on Nov. 21, 2024, in two cases before the District Court for the Northern District of Texas and the SEC recently withdrew its Fifth Circuit appeal. This means that the pre-Dealer Rule status quo on dealer registration remains intact for now.

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, state regulatory actions, and contractual violations with investors and counterparties. Involving finders in capital raising thus carries significant risks, and there are only limited exemptions for finder activities.

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 permissible activities of unregistered brokers.

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Outline

  1. Securities laws applicable to activities of unregistered broker-dealers
  2. SEC's rulemaking in this area and the Fifth Circuit's decision vacating the rules
  3. Implications of the court's decision and vacation of the rules
  4. Finders under various states' laws
  5. Finder-related exemptions
  6. Regulatory enforcement actions
  7. Practitioner pointers and key takeaways

Benefits

Derek N. Lacarrubba, Partner at K&L Gates and Eden L. Rohrer, Of Counsel at McIntyre & Lemon, 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
  • Permissible activities for finders and unregistered brokers
  • SEC enforcement against unregistered dealers
  • SEC broker-dealer enforcement cases in the cryptocurrency industry
  • The status of the SEC's amendments to the dealer rule
  • Practitioner pointers and key takeaways

Faculty

Lacarrubba, Derek
Derek N. Lacarrubba

Partner
K&L Gates

Mr. Lacarrubba is a partner in the firm’s Asset Management and Investment Funds practice, with a focus on...  |  Read More

Rohrer, Eden
Eden L. Rohrer

Of Counsel
McIntyre & Lemon

Ms. Rohrer specializes in securities broker-dealer regulatory matters, including broker-dealer status analysis,...  |  Read More

Attend on July 8

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You may pre-order a recording to listen at your convenience. Recordings are available 48 hours after the webinar. Strafford will process CLE credit for one person on each recording. All formats include course handouts.

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