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Think It's Found Money? Better Do It Right When Raising Investment Capital
When a business needs to raise money it may consider hiring a 'finder,' which is normally a consultant who helps the company find investors in the business. The company should proceed with caution in retaining a finder due to the regulated nature of its business, and there are several 'market' terms in a written Finder's Fee Agreement that the company should insist upon.
Generally, a 'finder' or 'placement agent' receives a 'finder's fee' depending upon the amount of capital it introduces to the company. The Securities and Exchange Commission ('SEC') has long regulated this practice and, depending upon a facts and circumstances test (known as the 'Issuer Exemption'), requires finders to be registered as broker-dealers under '15(a)(1) of the Securities Exchange Act of 1934. The factors the SEC considers for a finder to fall under the Issuer Exemption include:
- Whether the finder is an employee or independent contractor of the company;
- Will the finder's compensation be linked to the amount of securities sold or is it a fixed compensation;
- Does the finder devote a substantial portion of his or her time to rendering services for the company that are not related to the sale of securities;
- Does the finder intend to remain with the company after completion of the offering; and
- In the past, has the finder participated, or will the finder in the future participate, in other offerings by this or other companies?
The rationale for exempting finders from registration is that the finder is not a broker because he or she is not 'effecting' transactions for others. That is, the finder's activities are limited to identifying potential investors and introducing them to the company. The negotiation of the investment terms, the theory goes, is strictly between the company and the investor.
The DOJ's Corporate Enforcement Policy: One Year Later
The DOJ's Criminal Division issued three declinations since the issuance of the revised CEP a year ago. Review of these cases gives insight into DOJ's implementation of the new policy in practice.
Use of Deferred Prosecution Agreements In White Collar Investigations
This article discusses the practical and policy reasons for the use of DPAs and NPAs in white-collar criminal investigations, and considers the NDAA's new reporting provision and its relationship with other efforts to enhance transparency in DOJ decision-making.
How AI Has Affected PR
When we consider how the use of AI affects legal PR and communications, we have to look at it as an industrywide global phenomenon. A recent online conference provided an overview of the latest AI trends in public relations, and specifically, the impact of AI on communications. Here are some of the key points and takeaways from several of the speakers, who provided current best practices, tips, concerns and case studies.
The DOJ's New Parameters for Evaluating Corporate Compliance Programs
The parameters set forth in the DOJ's memorandum have implications not only for the government's evaluation of compliance programs in the context of criminal charging decisions, but also for how defense counsel structure their conference-room advocacy seeking declinations or lesser sanctions in both criminal and civil investigations.