On September 29, the Securities and Exchange Commission authorized the guideline proposal of the Financial Industry Regulatory Authority to subject capital acquisition brokers (CABs) to the exact same pay-to-play constraints currently appropriate to non-CAB member companies. As discussed in more information in this advisory, CABs are FINRA members that are participated in a minimal series of broker-dealer activities, such as encouraging companies on capital raising and business restructuring or serving as a personal positioning representative to institutional financiers (topic to conditions). Taxis choose to be dealt with as such and undergo a different set of structured FINRA guidelines.
The SEC’s pay-to-play guidelines forbid a financial investment consultant and its covered partners from supplying or accepting supply payment to anyone to obtain a federal government entity for financial investment advisory services on behalf of the financial investment consultant unless the person is a “managed person.” The SEC specifies a “controlled person” to consist of a FINRA member company topic to a FINRA pay-to-play guideline. FINRA’s brand-new guideline clarifies that CABs go through FINRA’s pay-to-play guidelines, and CABs, for that reason, make up “managed individuals.” As soon as the guideline works, a financial investment consultant and its covered partners might pay to a CAB to obtain a federal government entity for financial investment advisory services. Pay-to-play recordkeeping requirements will also use to CABs.