Update on Finder’s Fees

At the meeting what was discussed was how to amend the suggested regulation proposed in 2020 from the then Trump Administration which was not approved at that time.

All five of the SEC Commissioners started the meeting with their comments on the issue of Finders. There certainly was no unanimous opinion that any Finders law would be a good idea. In fact, SEC Chairman Atkins questioned that he did not feel that there was any indication that the SEC wanted to do anything with Finders legislation.

Regardless, the panel discussion went on for several hours with no firm recommendation to be presented upwards to the SEC. The major topics of discussion around the 2020 proposal were:

1. The definition of “Natural Person” in the era of AI, in that the proposal was written to only allow Natural Persons to be Finders.
2. The issue of compensation paid to the Finders in that there is a restriction against paying “transaction-based compensation” to a non-registered broker dealer. Can there be any or should be an upper limit?
3. The issue of having to register as a Finder, so that there is some record of how many deals and the outcome of those deals involving the same Finder.
4. The requirement that every person referred by a Finder has to be accredited and the Offering needed to be a 506c or other offering that does not require a pre-existing relation between the Sponsor of the offering and the Investor.

So, in conclusion, it is my opinion that more work will have to be done on amending the 2020 proposal and resubmitting it for comments from the public and a final set of regulations proposed by the Commission. Next year?