Series 7: 13.1.4. Restrictions On Payments To Unregistered Persons

13.1.4. Restrictions on Payments to Unregistered Persons

Retired representatives. Retired representatives who are no longer registered may continue to be paid commissions on customer accounts if the representative and member firm have agreed upon the continuing payments before retirement and the agreement stated that the retired representative would not be opening new accounts or soliciting new business.

Finders. A broker-dealer may employ a finder to locate potential investors. Finders may be other broker-dealers, but usually they are not. Finders are not required to be registered as broker-dealers as long as they limit their activities to introducing prospective investors to issuers or broker-dealers, and the introductions do not occur more than once. 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. Registered broker-dealers and registered representatives are generally prohibited from splitting their own compensation with an unregistered finder.

Foreign finders. However, member firms may share their compensation with unregistered foreign finders, provided tha