Does the Finder Regularly Engage in the Business of Facilitating Investments?
As the SEC first made clear in the Paul Anka no-action letter, the regularity of a finder’s activity is crucial to the determination of whether he or she is acting as a broker-dealer. Nothing is more certain to blow the finder’s exemption than engaging a person who regularly, or even more than once, acted as a finder for a fee. Individuals who profess to be “professional finders” may be successful in raising money, but they will put that money at risk and expose the company to the potential of regulatory action, fines, fees, penalties and myriad other bad things. If an issuer is looking for a proven product, the only safe bet is to employ a registered broker-dealer or placement agent. 3. Is the Finder’s Compensation Fixed or a Percentage of Money Raised? Perhaps no factor is more important when engaging a finder than compensation. Companies usually engage finders for the sole purpose of raising money, and do not engage them to provide financial or other consulting services. As a result
