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SEC Approves FINRA’s “Capital Acquisition Broker” Rules
15 November 2016
View Client Update
On August 18, 2016, the Securities and Exchange Commission approved new Financial Industry Regulatory Authority (“FINRA”) rules governing registration and regulation of “capital acquisition brokers” (“CABs”).
A broker-dealer may register as a CAB and become subject to a more streamlined rule book, if it limits the scope of its business to certain activities (e.g., private placements; certain M&A activities).
CABs are not subject to FINRA’s prohibition on the use of projections or predictions of investment performance contained in FINRA Rule 2210(d)(1)(F).
CABs may only solicit investors for private funds that rely on Section (3)(c)(7) and may not act as a “chaperone” for foreign broker-dealers under SEC Rule 15a-6.
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