Securities and Exchange Commission v. Chart Content, et al.
raw: Finders Proposed Exemptive Order: Overview Chart of Tier I Finders,
summary
No fraud occurred; the document is a non-binding SEC staff chart proposing conditional exemptions from broker registration for finders in capital raising, with no allegations, charges, or monetary penalties involved.
paragraph
The document is a proposed overview chart by the SEC’s Office of the Advocate for Small Business Capital Formation, outlining permissible activities for Tier I and Tier II finders versus registered broker-dealers in capital-raising transactions. It distinguishes allowable actions—such as connecting investors with issuers and distributing offering materials—from prohibited ones like negotiating terms, handling funds, or providing investment advice, while limiting finders to private, non-reporting issuers and accredited or non-accredited investors. No dollar amounts, charges, or enforcement actions are present, as the proposal remains non-final, non-binding, and subject to public comment without legal effect.
narrative
The document is not a fraud case but a proposed regulatory overview chart created by the SEC’s Office of the Advocate for Small Business Capital Formation to clarify potential exemptions from broker registration for finders in private capital raising. It compares permissible activities for Tier I finders (natural persons) and Tier II finders (including entities like crowdfunding platforms) against those of registered broker-dealers, specifying limits such as restricting finders to non-reporting issuers and prohibiting activities like negotiating terms, handling funds, or providing financial advice. The proposal distinguishes between accredited and non-accredited investors and permits finders to engage in activities like distributing offering materials and arranging meetings, but only if they comply with written agreements and investor disclosures. Importantly, the chart has no legal force or effect, does not alter existing securities laws, and remains subject to change pending finalization of any exemptive order. The SEC explicitly states that activities beyond the proposed safe harbors may still trigger broker-dealer registration requirements under Section 3(a)(4) of the Exchange Act, based on facts and circumstances. No individuals, entities, or transactions are accused of wrongdoing, and no monetary penalties, charges, or resolutions are involved. The purpose is to support small business capital formation by reducing regulatory ambiguity, not to enforce compliance or punish misconduct.
Classified non-corporate(confidence 100%). No EDGAR filing fingerprint (criminal/DOJ-side scheme). detection rule →
Parties
chart contentclear disclosure criteriaregistered brokerthis charttier ii finders
Keywords
exemptive orderproposed exemptivefinderstier findersproposedexemptiveorderchartactivitiesissuertierfinders proposedcommissionregisteredinvestors
Extracted insights
Entities 5
- person chart content
- person clear disclosure criteria
- person registered broker
- person this chart
- person tier ii finders
Triples 8
- Proposed Exemptive Order Grants Conditional Exemption From Broker Registration
- Finders May Not Rely On Proposed Exempt Activities
- The Commission Has Not Approved Chart Content
- The Commission Has Not Disapproved Chart Content
- Office of the Advocate for Small Business Capital Formation Created This Chart
- Registered Broker May Be Required To Enter Written Agreement With An Issuer
- Tier II Finders Require Clear Disclosure Criteria
- Broker-Dealer Must Provide Disclosures Based On Transaction Nature
Text layers
Extracted body text (4,418c)
Finders Proposed Exemptive Order: Overview Chart of Tier I Finders, Tier II Finders and Registered Brokers The below chart 1 provides a summary overview of some of the permissible activities, requirements, and limitations outlined in the proposed exemptive order granting a conditional exemption from broker registration for finders. 2 The proposed exemptive order has not been finalized and remains subject to change. Finders may not rely on the proposed exempt activities, requirements, and limitations outlined below until such time they are made part of a final operative exemptive order, if any, issued by the Commission. Proposed Finder Safe Harbors Registered 3 Brokers Tier 1 Finders Tier 2 Finders WHO Natural person Entities (including crowdfunding platforms) Associated person of a broker-dealer $ Transaction-based compensation INVESTORS Accredited investors Non-accredited investors ISSUER Non-reporting (private) company Reporting (public) company OFFERING Primary exempt offerings Secondary sales Registered offerings (e.g., IPOs, follow-on offerings) PERMITTED ACTIVITES Provide investor contact information to issuer Identify, screen, and contact potential investors Distribute issuer offering materials to investors Discuss issuer information included in offering materials Arrange or participate in meetings with the issuer and investor Structure the transaction or negotiate the terms of the offering Engage in general solicitation Handle customer funds or securities Power to bind the issuer or the investor Participate in the preparation of sales materials Perform independent analysis of the sale Engage in due diligence activities Assist or provide financing for investment purchases Provide advice as to the valuation or financial advisability of the investment May participate in more than one capital raising transaction within a 12 month period OTHER TERMS OF EXEMPTION Anti-fraud protections apply Written agreement with issuer required * Written disclosure to investors required ** No statutory disqualification * Depending on the activities a registered broker engages in, it may be required to enter into a written agreement with an issuer. ** While the proposed exemptive order prescribes clear disclosure criteria required of Tier II Finders, whether and the extent to which a broker-dealer is required to provide disclosures is generally based on the nature of the transaction and the rules and provisions of the Exchange Act that apply to the specific transaction. 1 This chart was created by the Office of the Advocate for Small Business Capital Formation and highlights several of the proposed terms of the conditional exemption from broker registration. It is not a rule, regulation, or statement of the Securities and Exchange Commission (“Commission”). The Commission has neither approved nor disapproved its content. This chart, like all staff guidance, has no legal force or effect: it does not alter or amend applicable law, and it creates no new or additional obligations for any person. We encourage you to look at the proposed exemptive order for more details and to share your feedback! 2 As described in the proposed exemptive order, the Commission has not broadly addressed the other types of specific activities that might implicate the Commission’s regulatory regime for brokers. Activities that go beyond the scope of the proposed safe harbors outlined herein (and any that may be adopted) and ultimately whether a person is a broker within the meaning of Section 3(a)(4) turns on the facts and circumstances of the matter. 3 See 15 U.S. Code § 78o and applicable provisions of the federal securities laws and related rules and regulations. Different types of broker-dealers may engage in different types of activities. For purposes of this chart, we are assuming that a registered broker- dealer satisfies all applicable requirements and has received all necessary approvals to engage in the identified activities. There are a variety of legal requirements, including Commission and FINRA rules, that apply to transactions involving registered broker-dealers, not all of which are highlighted in this comparative finders chart. For additional information on registration as a broker-dealer, see the Division of Trading and Markets’ Guide to Broker-Dealer Registration.
OCR text (7,609c · tika · 95% conf)
Finders Proposed Exemptive Order: Overview Chart of Tier I Finders, Tier II Finders and Registered Brokers The below chart1 provides a summary overview of some of the permissible activities, requirements, and limitations outlined in the proposed exemptive order granting a conditional exemption from broker registration for finders.2 The proposed exemptive order has not been finalized and remains subject to change. Finders may not rely on the proposed exempt activities, requirements, and limitations outlined below until such time they are made part of a final operative exemptive order, if any, issued by the Commission. Proposed Finder Safe Harbors Registered3 Brokers Tier 1 Finders Tier 2 Finders W H O Natural person Entities (including crowdfunding platforms) Associated person of a broker-dealer $ Transaction-based compensation IN V E S T O R S Accredited investors Non-accredited investors IS S U E R Non-reporting (private) company Reporting (public) company O F F E R IN G Primary exempt offerings Secondary sales Registered offerings (e.g., IPOs, follow-on offerings) P E R M IT T E D A C T IV IT E S Provide investor contact information to issuer Identify, screen, and contact potential investors Distribute issuer offering materials to investors Discuss issuer information included in offering materials Arrange or participate in meetings with the issuer and investor Structure the transaction or negotiate the terms of the offering Engage in general solicitation Handle customer funds or securities Power to bind the issuer or the investor Participate in the preparation of sales materials Perform independent analysis of the sale Engage in due diligence activities Assist or provide financing for investment purchases Provide advice as to the valuation or financial advisability of the investment May participate in more than one capital raising transaction within a 12 month period O T H E R T E R M S O F E X E M P T IO N Anti-fraud protections apply Written agreement with issuer required * Written disclosure to investors required ** No statutory disqualification * Depending on the activities a registered broker engages in, it may be required to enter into a written agreement with an issuer. ** While the proposed exemptive order prescribes clear disclosure criteria required of Tier II Finders, whether and the extent to which a broker-dealer is required to provide disclosures is generally based on the nature of the transaction and the rules and provisions of the Exchange Act that apply to the specific transaction. 1 This chart was created by the Office of the Advocate for Small Business Capital Formation and highlights several of the proposed terms of the conditional exemption from broker registration. It is not a rule, regulation, or statement of the Securities and Exchange Commission (“Commission”). The Commission has neither approved nor disapproved its content. This chart, like all staff guidance, has no legal force or effect: it does not alter or amend applicable law, and it creates no new or additional obligations for any person. We encourage you to look at the proposed exemptive order for more details and to share your feedback! 2 As described in the proposed exemptive order, the Commission has not broadly addressed the other types of specific activities that might implicate the Commission’s regulatory regime for brokers. Activities that go beyond the scope of the proposed safe harbors outlined herein (and any that may be adopted) and ultimately whether a person is a broker within the meaning of Section 3(a)(4) turns on the facts and circumstances of the matter. 3 See 15 U.S. Code § 78o and applicable provisions of the federal securities laws and related rules and regulations. Different types of broker-dealers may engage in different types of activities. For purposes of this chart, we are assuming that a registered broker- dealer satisfies all applicable requirements and has received all necessary approvals to engage in the identified activities. There are a variety of legal requirements, including Commission and FINRA rules, that apply to transactions involving registered broker-dealers, not all of which are highlighted in this comparative finders chart. For additional information on registration as a broker-dealer, see the Division of Trading and Markets’ Guide to Broker-Dealer Registration. https://www.sec.gov/reportspubs/investor-publications/divisionsmarketregbdguidehtm.html https://www.sec.gov/rules/exorders/2020/34-90112.pdf Accessibility Report Filename: Overview Chart of Finders (2020.9.24 v2 from OPA)[1].pdf Report created by: Ward, Brian (Contractor) Organization: [Personal and organization information from the Preferences > Identity dialog.] Summary The checker found no problems in this document. Needs manual check: 2 Passed manually: 0 Failed manually: 0 Skipped: 1 Passed: 29 Failed: 0 Detailed Report Document Rule Name Status Description Accessibility permission flag Passed Accessibility permission flag must be set Image-only PDF Passed Document is not image-only PDF Tagged PDF Passed Document is tagged PDF Logical Reading Order Needs manual check Document structure provides a logical reading order Primary language Passed Text language is specified Title Passed Document title is showing in title bar Bookmarks Passed Bookmarks are present in large documents Color contrast Needs manual check Document has appropriate color contrast Page Content Rule Name Status Description Tagged content Passed All page content is tagged Tagged annotations Passed All annotations are tagged Tab order Passed Tab order is consistent with structure order Character encoding Passed Reliable character encoding is provided Tagged multimedia Passed All multimedia objects are tagged Screen flicker Passed Page will not cause screen flicker Scripts Passed No inaccessible scripts Timed responses Passed Page does not require timed responses Navigation links Passed Navigation links are not repetitive Forms Rule Name Status Description Tagged form fields Passed All form fields are tagged Field descriptions Passed All form fields have description Alternate Text Rule Name Status Description Figures alternate text Passed Figures require alternate text Nested alternate text Passed Alternate text that will never be read Associated with content Passed Alternate text must be associated with some content Hides annotation Passed Alternate text should not hide annotation Other elements alternate text Passed Other elements that require alternate text Tables Rule Name Status Description Rows Passed TR must be a child of Table, THead, TBody, or TFoot TH and TD Passed TH and TD must be children of TR Headers Passed Tables should have headers Regularity Passed Tables must contain the same number of columns in each row and rows in each column Summary Skipped Tables must have a summary Lists Rule Name Status Description List items Passed LI must be a child of L Lbl and LBody Passed Lbl and LBody must be children of LI Headings Rule Name Status Description Appropriate nesting Passed Appropriate nesting Back to Top