SEC SAYS AGAIN: TRANSACTION-BASED COMPENSATION TRIGGERS REGISTRATION REQUIREMENT
For many years, people who assist companies either in finding investors or a purchaser for the business have been advised that, if they only make introductions and do not otherwise participate actively in the transaction, they should be able to avoid registering as a broker under Section 15 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Until a recent no-action letter, this was thought to be true even if the financial intermediary received a percentage of the amount raised as compensation, since the simple act of making introductions did not appear to involve being “in the business of effecting transactions in securities.”
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