FINDER'S FEE AGREEMENTS
A client came to me recently and said, "I need a 'Finder's Fee Agreement'. I want to help some people raise some money." Immediately, a red light went off in my mind. If the Finder Fee Agreement is not done correctly it can easily be a landmine of liability.
Section 15(a) of the Securities Exchange Act of 1934 (Exchange Act) generally requires any person who participates in securities transactions under U.S. laws to register with the SEC as a broker-dealer. In very limited circumstances, finders who are not registered broker-dealers may be used without violating the federal securities laws.
No single factor is determinative of whether a finder is required to register as a broker-dealer. The SEC maintains a "case by case" approach and will judge each situation on its facts and circumstances.
There are significant risks if the finder fails to be properly registered as a broker-dealer. The finder will face possible criminal liability, fines, and suspension. The investor can rescind the purchase of the securities that were offered, to the detriment of the other investors. And, the offeror of the securities can face additional liability for aiding and abetting the activities of an unregistered broker-dealer.
In a sitaution where someone approaches you to help them raise money, be very careful to set up the agreement so as to abide by the rules and regulations dealing with securities. Please contact us to discuss the issues and determine what would be the best strategy in moving forward.
Posted by snebgen at 8/23/2010 4:39 PM 
Categories: arizona, entertainment, music, theatre, film, television, law
Tags: showbiz carmichael arizona politics entertainment theater film showbiz az stephen stephen nebgen show busines stephen wade nebgen music nebgen show biz
Categories: arizona, entertainment, music, theatre, film, television, law
Tags: showbiz carmichael arizona politics entertainment theater film showbiz az stephen stephen nebgen show busines stephen wade nebgen music nebgen show biz
Comments