Finder Registration – 2026 Update

As I discussed in the original article, and its updates, despite years of discussion and proposals, there has been no significant changes in the regulation of finders.

The SEC’s 2020 proposal for a two-tier finder exemption was never finalized. Therefore, the traditional broker-registration analysis under Exchange Act Section 15(a) still applies. A person who regularly solicits investors, participates in negotiations, recommends investments, handles funds or securities, or receives transaction-based compensation remains at significant risk of being treated as an unregistered broker. The SEC itself continued to describe the 2020 proposal in 2025 as proposed but not adopted.

Transaction-based compensation remains especially problematic. It is not necessarily dispositive by itself, but it continues to be one of the strongest indicators of broker activity. FINRA Rule 2040 also continues to prohibit member firms from paying compensation to an unregistered person when the person’s activities require broker-dealer registration.

What changed in 2025–2026

1. SEC advisory committee formally recommended a new finder framework

In February 2026, the SEC Small Business Capital Formation Advisory Committee approved recommendations supporting a limited exemption. Its April 2026 submission urged the Commission to:

• adopt a limited finder exemption;
• permit finders to communicate with investors about the issuer and financing terms;
• require disclosure of the finder’s identity, compensation, and relationships;
• consider a minimal registration or notice-filing system;
• exclude bad actors;
• consider federal preemption of inconsistent state requirements; and
• possibly provide a blanket exemption for offerings below a specified size.

These are recommendations only, not binding law.

2. A formal rulemaking petition was filed

On March 17, 2026, a law firm filed a petition asking the SEC to revive the finder initiative through full notice-and-comment rulemaking and, pending a final rule, issue updated interpretive guidance distinguishing finder activity from brokerage activity. Again, the petition does not itself change the law.

3. SEC commissioners have publicly revisited the issue

In July 2025, Commissioners Peirce and Uyeda expressed interest in developing a workable finder framework for smaller private offerings. Commissioner Crenshaw emphasized that any exemption would need stronger investor-protection safeguards. These statements show that finder reform is actively under consideration, but they do not create a safe harbor.

4. FINRA’s Capital Acquisition Broker rules were expanded

A concrete regulatory change occurred in February 2026, when the SEC approved amendments to FINRA’s Capital Acquisition Broker, or CAB, rules. These amendments broaden the activities available to registered CABs, including:

• acting as a finder or placement agent in certain offerings of newly issued unregistered securities;
• representing institutional investor buyers as well as issuers;
• participating in exempt secondary transactions between institutional investors;
• receiving issuer equity as compensation under specified conditions;
• permitting CAB associated persons to engage in private securities transactions subject to FINRA Rule 3280; and
• aligning the CAB rules more closely with the statutory M&A broker exemption.

The SEC approved SR-FINRA-2025-005 on February 10, 2026.

This is important because it provides a more flexible registered pathway for firms engaged primarily in private placements and capital-raising activity. It does not exempt ordinary unregistered finders.

Existing statutory M&A broker exemption

The federal M&A broker exemption enacted in 2023 remains available for qualifying intermediaries involved in transfers of ownership and control of privately held companies. It is transaction-specific and subject to numerous limitations. It does not generally cover capital-raising finders introducing investors to issuers.

The original article, as updated over the years, is Finders Explained – Be Careful.