In private securities offerings where the company does not engage an investment banker who is a registered broker-dealer to market the offering to investors, companies will often seek the assistance of so-called “finders,” who are not registered as broker-dealers, to connect the company with potential investors. These finders are often paid a pre-determined percentage of the amount ultimately raised by the company from the investors introduced by the finder. Though this practice is extremely common, this area of the law is very much a gray area, and there are significant risks to both the finder and the company that should be considered.
Welcome to the inaugural entry in my new corporate and securities law and transactions blog. The focus of this blog will NOT be a place to find exhaustive summaries of the latest SEC rule proposal or decision of the Delaware Chancery Court. That sort of thing is covered effectively by my former brethren (and sistren) at large firms and by other legal blogs. I will link to such summaries that I think readers will find useful. Rather, my goal here is to provide attorneys, along with business people and other non-attorneys who work on transactions, some practical tips and thoughts on issues that I frequently come across in my practice. I will aspire to write in what the SEC calls plain English, though you can rest assured that it will not be a good beach read.