Series 82: Finders

Finders

Instead of using a placement agent, issuers may opt to employ a finder to locate potential investors. Finders may be registered broker-dealers, but usually they are not. Finders are not required to be registered broker-dealers as long as they limit their activities to introducing prospective investors to an issuer. Finders cannot by law promote or recommend securities to a prospective investor, develop terms, or negotiate for either the issuer or investor. Moreover, they must base their compensation on either a flat fee or a percentage fee that is not contingent on the closing of a securities sale. Companies generally prefer to employ a placement agent, although finders may be more willing to work with younger, smaller companies. Form D requires issuers to disclose any finder’s fees.

Registered broker-dealers and registered