|
Brokers and Finders in Securities Law
Article #1 – Overview
In this
series of articles, I explain the law of brokers and finders
in selling securities. My intended audience is the business
owner who sells stock (or LLC interests) to raise capital
for the business. The articles deal generally with
securities offerings (that is, private placements of
securities) and specifically with the law of brokers and
finders in the context of a securities offering.
Broker law
applies to you if you sell stock or if you hire other people
to sell your stock. In brief, a broker is a person engaged
in the business of effecting transactions in securities for
the account of others (and in California, also for your own
account). A broker is someone who is in the business of
selling stock.
Here is the
key concept: when you sell stock, you must register as a
broker unless you are not engaged in the business of
selling securities. Hence the subject of this series of
articles is how to sell stock in your business and avoid
registering as a broker or otherwise violating the broker
laws. The articles in the series are:
Consequences of Violating the Broker Laws
Why is this
topic important? Because the law punishes a person who acts
as a broker without registration. Consequences for the
offending person (that is, the person who sells the stock)
include personal liability + possible disciplinary action or
criminal prosecution from the SEC and/or the California
Commissioner of Corporations. If you lose in court, the
court likely would require the person who sells the stock
and the company that issues the stock to return to the
investors their purchase price for the stock.
To continue
in this subject, go to my next article,
Who is
a Broker? – Definition.
Get a
Securities Lawyer
An offering
of securities is complicated. You must comply with a host
of securities laws, of which broker laws form only a small
part. You can comply with the broker laws that I outline in
these articles and still violate some other securities laws
related to your offering. You need a securities attorney to
guide you through. Feel free to call me if you have any
questions or comments.
Call me to schedule a
legal consultation: 510-796-9144 | 